“We need to be looking at all options when considering the relief of property taxes,” said state Rep. Sheryl Delozier, a Republican representing Cumberland.
The legislature continues to have lengthy discussion on various bills aimed at addressing property taxes, but it’s been difficult to find any one piece of legislation that school districts, counties and other groups agree upon, she said.
This week, Hertzler, joined by fellow Commissioner Barbara Cross, unveiled a plan that would allow counties to enact a 1 percent sales tax for the sole purpose of reducing school, county and municipal property taxes without raising additional revenue.
In Cumberland County, such a tax would generate $42.3 million for property tax relief, or about a $700 tax cut for every homestead and farmstead on average, and $1,400 in relief if a property qualifies as both, Hertzler said.
“I think this is outstanding, because it’s simple and easy to understand,” said state Sen. Pat Vance, also a Republican who represents parts of Cumberland and York counties.
As with anything, there might be some drawbacks, including winning over legislators who’ve taken Grover Norquist’s “no-tax pledge,” Vance said.
Norquist is a conservative libertarian activist and founder of the advocacy group Americans for Tax Reform. Many conservative and libertarian politicians took that no-tax pledge while running for office in 2010.
There’s also a bit of uncertainty in what a county sales tax might do for property tax relief if markets were to go sour and the country entered another recession, Vance said.
Delozier was concerned about what happens if one or two counties in an economically linked region, such as Central Pennsylvania, enact a sales tax but the rest don’t. That might drive more economic activity to those counties that didn’t levy the tax, particularly for large-ticket retail items such as cars. That could hurt business in those counties that enact the tax, she said.
Rep. Stephen Bloom, also a Republican from Cumberland County, said Hertzler’s proposal is nearly identical to a bill Rep. Seth Grove (R-York County) sponsored in the last legislative session.
Bloom co-sponsored the legislation, House Bill 2230.
“The idea has already been on the table and would open up a countywide referendum on the sales tax,” Bloom said.
However, a county sales tax only scratches the surface of property tax reform, he said. Bloom favors a more comprehensive approach that would eliminate the property tax and replace it.
“I share the concern deeply about the arbitrary and unfair funding through property taxes,” he said.
All three legislators said they expect the subject to be a significant issue in the 2013-14 session.
“I think it would be good to look at those tax laws and see if there are ways we can give counties more flexibility,” Delozier said.