Contact Your Legislators

HARRISBURG, PA – Targeted tax reductions and limited government spending are the best ways to foster business and job growth and position the Commonwealth to withstand economic instability, the Pennsylvania Chamber of Business and Industry said today in response to Gov. Ed Rendell's 2008-09 budget address.

"While the business community and the governor are in agreement that Pennsylvania's uncertain economic situation requires attention, differences of opinion exist on the best approach to economic stimulus," said Gene Barr, PA Chamber vice president of government and public affairs. " Job creators know best what is needed to operate and grow their businesses and create jobs for residents. This includes creating a business climate that enables them to thrive rather than being content with one that places them at a competitive disadvantage."

Barr said the administration's surprise Capital Stock and Franchise tax increase is definitely not the right step to take. Although the governor does not propose to change the 2011 phase-out date, the rate would change from 1.89 mills to 2.49 mills in 2009 and from 0.89 mills to 1.02 mills in 2010, resulting in an apparent $40 million hit to business in the 2008-09 fiscal year alone.

Barr said tax reductions as economic stimulus, including keeping the current CSFT phase-out rate, should be the focus for the coming fiscal year.

Two key tax changes supported by the PA Chamber and the unified business community include the elimination of the cap on net operating losses and implementing a single sales factor apportionment formula for the Corporate Net Income tax.

Removing the NOL cap would be particularly beneficial to start-up businesses, which often lose money in their first years of operation, while implementing a single sales factor would mean that Pennsylvania businesses would no longer be penalized for increasing investments in capital and hiring employees.

These tax changes are supported by a bipartisan group of lawmakers, as well as by members of the CompetePA Coalition, an initiative comprising more than 100 individual businesses, business groups – including the PA Chamber – and local chambers of commerce throughout the state.

Barr said the tax changes would go a long way to improving the Commonwealth's business climate, regardless of whether or not a recession materializes, and would result in measurable progress for the state.

"The state's economic standing can't be measured in a vacuum. In the competitiveness race, Pennsylvania continues to lag the nation, " he said, noting that the Commonwealth experienced a poor rate of growth compared to the national average and consistently scores mediocre or near bottom-of-the-barrel rankings for overall competitiveness when compared to other states.

"Simply throwing more money at a problem is not the answer," Barr said. "When it comes to economic development, government needs to listen to job creators. This is especially true during times of economic uncertainty. "

###

The Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership representing nearly 50 percent of the private workforce.