PA tax on real estate transactions

Networx ^ | 4/21/2010 | Sirena Rubinoff

[Jaysin]

Pennsylvania Gov. Edward G. Rendell has proposed a revamping of his state's tax system, which he thinks will help propel the state forward even after federal government stimulus money runs out in 2011. But Pennsylvania realtors and residents worry that new taxes will reduce the demand for housing and cause the state's economy to continue to lag.

The governor's proposed tax changes would include an appreciated reduction of statewide sales taxes to 4 percent, except in Allegheny County, which would be 5 percent and in Philadelphia, which would be 6 percent. However, Gov. Rendell also wants to remove tax exemption status from 74 non-essential services, including all services related to real estate transactions. This would put an additional 4 percent tax onto "professional services" fees charged by attorneys, architects, accountants, home inspectors, construction companies, and more. The proposed tax changes would not affect essential products and services, such as food, clothing, prescription drugs, manufacturer processing, agriculture machinery and nonprofit cultural activities.

The governor explained his reasoning in a February interview with the Pittsburgh Post-Gazette, saying, "The sales tax today is a testament to the power of lobbyists and special interests. There is little rhyme or reason why we tax some items or services and wholly exclude others, except that in years past someone lobbied to secure favored treatment at the expense of others."

Gov. Rendell hopes the new taxes will bring in an extra $531 million in the first year and plans to use the money to bolster Pennsylvania's economy when federal stimulus funds come to an end in 2011. The extra tax revenue will also be used to cover the costs of future pensions for retired state workers and teachers.

The proposal, however, is receiving complaints from members of the Pennsylvania Association of Realtors (PAR), who rallied at the state capitol on March 24 in opposition to the new tax increases on professional services.

"Consumers in Pennsylvania will have to spend thousands of dollars more to purchase a home if Gov. Rendell's plan is enacted," said PAR president Don Roth in an interview with PR Newswire. "Housing will become less affordable and beyond the reach of many Pennsylvanians."

Roth worries that the proposed tax changes would not jumpstart the state's economy as Gov. Rendell hopes, but actually hinder its progress by reducing the demand for new housing.

Ultimately, the choice lies in the hands of the State Legislature. Realtors and all the other industries affected by the proposed tax increases will be putting heavy pressure on lawmakers to keep the bill from going into effect.

"These are complicated tax issues, and they are new," said Gov. Rendell to the Post-Gazette. "I'm not surprised [by the lack of positive reaction]. Legislators deserve time to study it. I know it will be an uphill battle."

The full list of the 74 exemptions that Gov. Rendell wishes to repeal is as follows:

Accounting, auditing and bookkeeping services, Administrative services, Advertising, public relations & related services, Air transportation, Airline Catering, All other professional and technical services, Amusement & recreation industries, Architectural, engineering, & related services, Bad Debts, Basic television, Call Center Credit, Candy and Gum, Caskets and Burial Vaults, Catalogs and Direct Mail Advertising, Charges for Returnable Containers, Coal, Coin Operated Food and Beverage Vending Machines, Commercial Vessels (Construction & Repair), Commercial Vessels (Equipment, Maintenance), Common Carriers, Construction of Memorials, Consulting (scientific, environmental, & technical), Custom programming, design & data processing, Dry-cleaning & laundry services, Electric - Residential, Electrical, plumbing, heating & AC service fees, Financial Institutions Fees, Firewood, Fish Feed, Flags, Fuel Oil/Gas - Residential, Funeral parlors, crematories & death care services, Gratuities, Helicopters, Horses Sold To Out of State Purchasers, Hotel-Permanent Resident, Information services, Investment Metal Bullion & Investment Coins, Legal, Liquor or Malt Beverage Purchased From Retail Dispenser, Magazines, Motor Vehicles (Out-of-State Purchases), Museums, historical sites, zoos, & parks For-Profit, Newspapers, Non-Prescription Drugs, Other transportation, Other: personal services, Parking lots & garages, Personal care services, Personal Hygiene Products, Rail Transportation Equipment, Recreational parks, camps & campgrounds, Rental of Films for Commercial Exhibition, School Buses, Scientific research & development services, Services to Buildings and Dwellings, Specialized design, Spectator sports admissions (excludes schools), Stair Lift Devices, Telephone - Residential, Temporary Usage Textbooks, Theater, dance, music & performing arts admissions For-Profit, Tourist Promotion Agencies, Transit & ground transportation, Trout, Truck transportation, Uniform Commercial Code Filing Fees, Veterinary fees, Warehouse Storage, Waste management and remediation services, Water and Sewage Services, Wrapping and Packing Supplies.

[darkangel82]

PA, of course. Choke on it Rendell you commie.

[Carley]

NJ charges sales tax on real estate. You sell your home to get the hell out of this state and they charge you thousands of dollars.