PBPC: Capital stock and franchise tax could be key to transportation funding
Maintaining the capital stock and franchise tax, rather than eliminating it by 2016, would help Pennsylvania with its transportation infrastructure problem, according to the Pennsylvania Budget and Policy Center.
Sharon Ward, director of the liberal-leaning Harrisburg research center, testified Tuesday before a state House committee. The commonwealth could float $2.5 billion in new debt to fund roads, bridges and public transit and then cover annual debt by keeping the CSFT at its current rate, she said.
The original 2013-14 budget proposal called for the elimination of the tax on business assets by Jan. 1, 2014. However, due to tighter state revenue and rising pension obligations, it was extended two more years. It is to be reduced to 0.67 mills in 2014 and 0.45 mills in 2015.
If not that, lawmakers could put a minimum corporate tax in place with revenue dedicated to paying down the debt, Ward said.
“Financing long-term road improvements with long-term bonds means that drivers, long distance truckers and all businesses that profit from a good transportation system will contribute to the roads they are using now and 15 years from now,” Ward said.
Ward presented the transportation funding idea as an alternative to legislation that would redirect about $1.2 billion in sales taxes paid on motor vehicle purchases out of the state’s general fund and into the motor license fund to pay for transportation projects.