The LuLac Edition #2097, June 20th, 2012

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WRITE ON WEDNESDAY

A REVENUE SOURCE OR REFORM? 

For years State Representative Eddie Day Pashinski has been saying that there could be affordable health care for low income Pennsylvanians. Pashinski has been advocating that the money come from the Vendor Tax which raises over 70 million dollars every year. The state needed about 49 million to save the Adult Basic program. This past week, the Citizen’s Voice ran an editorial about the future of the Vendor Tax. It is, like many things governmental in Pennsylvania behind the times. Here’s what the newspaper opined: 
Back when you bought hardware at the local hardware store, prescriptions at the neighborhood pharmacy and clothes at a local shop, it made sense for the state government to reward those merchants for collecting the state sales tax and turning over the money regularly, on time. The process was labor-intensive and imposed significant costs on small retailers, who kept handwritten books. Now, of course, the process is automated for almost all retailers, especially for the big-box hardware, electronics and general merchandise retailers that have replaced the corner store. Yet the commonwealth continues to allow vendors to keep 1 percent of the sales taxes they collect if they turn over the money on schedule. Former Gov. Ed Rendell proposed eliminating the vendor discount about five years ago, arguing that the computerization of retail sales and accounting had rendered it unnecessary. Now, Gov. Tom Corbett has proposed a modified version, capping the discount at $250 per month. Substantial revenue is at stake. According to the left-leaning Pennsylvania Budget and Policy Center, the vendor discount will leave $71 million in tax collections with retailers by June 30, the end of the current fiscal year. More than $1 million each will go to just five companies - Walmart alone will retain up to $3.1 million - and another 11 will keep $500,000 or more each. To keep $500,000, a company would to have more than $833 million in taxable sales. Among all retailers, however, most are small. About 74 percent will retain $50 or less. There is no reason to continue paying massive retailers to collect taxes they are required by law to collect, especially since the heavy lifting of doing so has been taken over by automated systems. Lawmakers should adopt the revision not only for the revenue, but as one step toward modernizing the state's tax structure.