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Wolf hopeful on cutting corporate taxes, reforming pensions

Gov. Tom Wolf often talks about striking a balance when it comes to the role of government and the impact it has on business in Pennsylvania.

At the annual governor’s breakfast hosted Thursday morning by the Harrisburg Regional Chamber and Capital Region Economic Development Corp., the former York County businessman again played to the theme of creating a predictable playing field for businesses.

He also highlighted his role in the phase-out of the capital stock and franchise tax and reiterated his support for slashing the corporate net income tax to 4.99 percent from the current 9.99 percent.

Wolf supports reducing taxes but under a combined reporting method to curtail loopholes — a trade-off opposed by many business leaders.

“I think it will take some conversation again,” he said after his keynote speech at a Cumberland County hotel. “Theoretically, the proper thing to do is reduce tax rates and broaden the base. Part of the reason tax rates in some places get high is because you don’t have a broad base. As you create loopholes, you create the need to raise the nominal rate, which is what is happening in Pennsylvania.”

The second-year Democratic governor said he is optimistic that reduction of the corporate net income tax will be part of this year’s budget negotiations.

“I am willing to have a very serious conversation. I think we will,” he said. “The high rate creates sticker shock.”

Wolf also said he is willing to support public-sector pension reform, a top policy item for many Republican lawmakers and business leaders. But he passed the issue back to lawmakers.

“That issue is really between House and Senate Republicans,” he said.

The two state-sponsored retirement systems have unfunded liabilities that are approaching $60 billion.

Pension reform was part of last year’s budget negotiations and a Senate proposal backed by the governor, but that effort was thwarted over differences in proposed tax increases. 

In February, the administration presented a budget plan for 2016-17 that calls for increasing the personal income tax to 3.4 percent from 3.07 percent, expanding the sales tax base and adding a 6.5 percent severance tax on natural-gas drilling. 

Wolf also proposed an increase in cigarette and tobacco taxes and a surcharge on insurance premiums and the bank share tax, plus a new 8 percent tax on promotional play at casinos.

“If we strike the right balance, there’s nothing Pennsylvania can’t achieve,” Wolf said in his speech today.

The current fiscal year ends June 30.

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