HARRISBURG, Pa., July 2, 2003 (PRIMEZONE) -- The Pennsylvania Chamber of Business and Industry today sent a letter to Gov. Ed Rendell seeking clarification on the administration's position on Delaware Holding Company provisions and passive investment companies as outlined in H.B. 1305.
The PA Chamber said the letter that Revenue Secretary Fajt sent to members of the General Assembly, and released publicly, appears to contradict previous statements and explicit promises made by the administration regarding this critical business issue.
A copy of the PA Chamber's letter to the governor is attached.
July 2, 2003 The Honorable Edward G. Rendell Governor of Pennsylvania 225 Main Capitol Building Harrisburg, PA 17120
Dear Governor Rendell:
The Pennsylvania Chamber of Business and Industry is extremely concerned and perplexed by the letter that Revenue Secretary Fajt sent to members of the General Assembly. This letter, which was released publicly, addresses your proposed changes to current state law regarding passive investment companies (PIC) or Delaware Holding Companies. Given your prior pronouncements about the PIC issue, we were taken aback by the comments and tone of the letter.
On May 8, you addressed the board of directors of the Pennsylvania Chamber of Business and Industry directly and said that business in the Commonwealth did not have to worry about the PIC issue this year. It was, you assured us, "off the table" for this budget cycle.
Further, you told our board that your administration underestimated the impact of this legislation on Pennsylvania's job creators, and shared the PA Chamber's opinion that discussion on this PIC issue must be addressed in the context of the overall tax structure and in conjunction with a reduction in the Corporate Net Income tax. In fact, you invited the PA Chamber to sit on your tax commission so that a comprehensive review of Pennsylvania's business tax structure could be undertaken.
You expressed this same position to other business organizations on numerous occasions since May 8, including most recently on June 21 at the Pennsylvania state reception for the National Biotechnology Conference held in Washington, D.C.
We are sure you can understand our confusion. We are greatly concerned that a member of your cabinet would release a letter that appears to contradict your previous statements and explicit promises.
We are also concerned that your administration cites the PA21 report. Among the many concerns regarding the report, at no point were economic models run on the recommendations, nor were long-term projections presented. The report is incomplete. As such, we would caution the administration from relying on its content to develop tax policy for business in the Commonwealth.
The Chamber remains adamantly opposed to H.B. 1305, which contains your language on this issue. Pennsylvania businesses already contend with a tax structure that is one of the most complex and onerous in the nation. Despite Revenue's misguided claims to the contrary, tax practitioners, accountants and lawyers all agree that H.B. 1305's poorly drafted language would capture legitimate business transactions. As stated in our testimony, we are certain that, if adopted, this legislation would cripple economic recovery and job creation.
You've indicated that you are interested in improving the business climate in Pennsylvania, and we assure you that the Chamber is committed to working with you to achieve this goal. In light of Sec. Fajt's letter, however, we are requesting reassurance that you and your administration remain committed and are serious about attracting and retaining jobs in Pennsylvania.
We look forward to hearing from you directly on this issue and receiving clarification as to whether your statements or those of your cabinet are the position of the administration on this critical business issue.
Sincerely, Floyd Warner President Pennsylvania Chamber of Business and Industry
The PA Chamber of Business and Industry logo is available at: http://media.primezone.com/prs/single/?pkgid=353