HARRISBURG, Pa., March 4, 2003 (PRIMEZONE) -- The Pennsylvania Chamber of Business and Industry today expressed disappointment that Governor Ed Rendell has chosen to freeze the phase-out of the Capital Stock and Franchise Tax for a year as part of his budget proposal.
Pennsylvania is the only state requiring companies to impose both a Capital Stock and Franchise Tax (CSFT) and a Corporate Net Income Tax. The Chamber supports an accelerated phase-out of the CSFT in an effort to level the playing field with competitor states. In addition to the CSFT, Pennsylvania has the third-highest Corporate Net Income Tax rate in the nation and one of the most restrictive Net Operating Loss Carryforward caps in the country.
"High corporate tax rates in the state serve as a disincentive to existing businesses as they make expansion decisions and to new businesses that are considering locating here in Pennsylvania," said Floyd Warner, president of the Chamber. "Now more than ever, we must focus on growing the economy and we can do that by fostering a business environment that is conducive to job creation and job retention."
Warner said Pennsylvania needs a comprehensive business tax plan that gives us a competitive advantage over other states. "Pennsylvania does not operate in a vacuum; we are constantly challenged by our surrounding states as they pursue our businesses and steal our jobs. With lower tax rates, they are often successful in this race."
"The combination of CSFT and a high CNI is always going to be a deal breaker," Warner added. "Companies that are considering locating here are going to look at what it will cost them to create a job. If it's too much, they'll go elsewhere. It's that simple."
"As Governor Rendell looks to how he will fund his spending plan, we had hoped that he would not balance the budget with regressive taxes on business," he said. "To do so would have a detrimental impact on our ability to attract and retain jobs in Pennsylvania. No jobs in Pennsylvania means no Personal Income Tax collections; no corporations means no corporate tax collections. The Commonwealth would be stuck in a vicious cycle that would hinder our ability to raise revenue now and in the future. We urge the governor to reconsider his thinking on the Capital Stock and Franchise Tax freeze."
More information on the Chamber's business tax initiative can found on its Web site at www.pachamber.org.
The PA Chamber of Business and Industry logo is available at: http://media.primezone.com/prs/single/?pkgid=353