Piccola's Tax Change Would Benefit Companies Investing in Pennsylvania

HARRISBURG, Pa., June 22 /PRNewswire/ -- Recognizing the need to find ways to improve Pennsylvania's job climate, Senate Majority Whip Jeff Piccola (R-15), joined by large and small employers from throughout the state, called today for support for enacting a "Single Sales Factor" proposal this year.

Piccola's Senate Bill 380 would change Pennsylvania's Corporate Net Income Tax (CNI) to a Single Sales Factor. Pennsylvania's CNI tax is currently comprised of three components: sales, property, and payroll. Prior to 1999, each of these factors counted as one-third in the calculation of employers' CNI tax. A number of states have enacted a Single Sales Factor, which provides an economic incentive for companies to expand or locate in their home state.

"We are here today to advocate for a change in the CNI formula to move from 60 percent sales to 100 percent sales. This change would represent an important and sorely needed step to encourage job creation and job growth in the Commonwealth. In light of the current budgetary restraints, I believe it is the best way to protect and grow Pennsylvania jobs," Piccola said.

In 1999, Governor Ridge successfully advocated a change in the CNI formula that taxes sales at 60 percent, property at 20 percent, and payroll at 20 percent. "This change helped make our Commonwealth more competitive. More importantly, by emphasizing sales over property and payroll, this change rewards companies that make a commitment to Pennsylvania - building facilities here and paying people to work in our state," said Piccola.

"Since 1999, a number of other states have begun to enact similar changes. As a result, the competitive advantage that Pennsylvania had during the Ridge years has since been eroded," Piccola added.

Piccola also touted the advantages of enacting a Single Sales Factor. "A Single Sales Factor plan would positively impact thousands of existing employers and reward companies with property and payroll in Pennsylvania. The estimated cost is $75 million - well within the existing projected budget surplus."

During a press conference, business taxpayers from throughout Pennsylvania joined Piccola to share their growing desire to make Pennsylvania more competitive with other states. Among those advocating the Single Sales Factor were Joseph Cottonaro, Senior Director of Taxes at The Hershey Company, and Kirk Liddell, President & CEO of The Irex Corporation and First Vice Chair of the Pennsylvania Chamber of Business & Industry.

"By enacting a Single Sales Factor apportionment formula, Pennsylvania will encourage the creation of new jobs and new capital investment. This targeted tax change is an economic development driver that will reward additional investment, and signal to existing and prospective new employers that Pennsylvania is serious about improving its business climate," explained Joseph Cottonaro of The Hershey Company.

"Collectively, the business community has declared that it's time for government to stop telling us what we need in order to create jobs and to start listening to those of us who are in the private sector, every day, trying to create the jobs. As part of The Chamber's Agenda for Jobs, this legislation represents a necessary step to improve Pennsylvania's tax structure in order to stimulate job growth. We urge the adoption of such a pro-jobs tax measure as the Single Sales Factor during this budget cycle," said Kirk Liddell of The Irex Corporation.

"I think it's obvious that the simplest, most cost effective tax change for Pennsylvania is the enactment of the Single Sales Factor. In order to remain competitive, we can - and should - make positive changes to our tax structures. My common sense legislation will do just that and should therefore be a significant factor in the passage of the budget," added Piccola.

Piccola's legislation includes 19 cosponsors and builds upon a similar measure - House Bill 515 - a Single Sales Factor plan which was recently approved by the House of Representatives - sponsored by Representative Dave Reed (R-62).