With big school funding plan on tap, Wolf expects $3B per year by cutting sales tax exemptions

Pennsylvania state government would reap $3 billion a year under Gov. Tom Wolf's plan to expand a 6.6 percent sales tax to include transactions on 45 categories of products or services that are currently exempt, according to figures released by his administration Wednesday.

The new figures underscore how big a role the sales tax expansion would play in the Democratic governor's plan to pump $3.2 billion a year into cutting school property taxes and providing $2 billion in new aid to pre-kindergarten programs and public schools over his four-year term.

Continue Reading Below

It would be a bigger source of money than either Wolf's proposal to raise the sales tax rate by 10 percent to 6.6 percent and the income tax by 20 percent to 3.7 percent. The tax revenue gained by removing the sales tax exemptions would almost rival the amount of new revenue under Wolf's plan to increase both the sales and income tax rates.

The biggest exemptions Wolf is proposing to remove include purchases of non-prescription drugs, candy and gum, tickets to entertainment events and venues, and the services of real estate agents, lawyers and barbers and salons.

It will need approval by the Republican-controlled Legislature, where leaders are willing to consider the money for dollar-for-dollar property tax cuts, but are circumspect about increasing taxes to pay for pension obligations and state programs, such as aid for pre-kindergarten programs and public schools.