Pennsylvania Governor Proposes to Nix Cellphone Tax, Accelerate Tax Cuts

By: Benjamin Valdez

Pennsylvania Gov. Josh Shapiro (D) kicked off his first budget address by proposing to eliminate the state's cellphone tax and calling for the acceleration of scheduled corporate tax rate reductions.

During his March 7 budget address, Shapiro unveiled a $44.4 billion fiscal 2024 budget proposal that would exclude mobile telecommunications services from the gross receipts tax and sales and use tax, effective January 1, 2024, and create a personal income tax credit of up to $2,500 a year for three years for nurses, teachers, and police officers who acquire related licenses after January 1, 2023.

Shapiro also called on lawmakers to accelerate reductions to the corporate net income tax. Under the fiscal 2023 budget signed by then-Gov. Tom Wolf, the corporate net income tax rate fell from 9.99 percent to 8.99 percent this year and is slated to decrease by half a percentage point annually until reaching 4.99 percent in 2031.

“If we want to plant a flag and say we are going to be a leader, then we need to continue lowering the corporate net income tax,” Shapiro said. “While the work that you began is critically important, we need to speed up these cuts. So let’s work together to do just that.”

Senate Republicans have already announced plans to file legislation that would hasten the tax cuts.

The governor's proposed budget would also expand the property tax and rent rebate program for senior and disabled taxpayers to benefit 173,000 more taxpayers, allow the eligible income caps for the benefits to rise with inflation, and increase the rebate caps from $650 to $1,000.

According to the budget summary, exempting mobile telecommunications services from the gross receipts and sales tax would cost the general fund $62 million in fiscal 2024, and the new tax credits would cost $24.7 million. Shapiro's budget also includes a line item for a potential 20 percent tax on the sale of adult-use recreational cannabis, which has yet to be legalized in the state.

Shapiro's budget faces a General Assembly that is split for the first time in over a decade — Democrats gained narrow control over the House through three special elections held in February.

Some Republican lawmakers were quick to criticize the governor's plan. Senate Majority Leader Joe Pittman in a March 7 statement said that "the governor’s proposed tax credit only for certain front-line workers picks winners and losers. Now is the time to encourage workforce participation in all areas and to make it more attractive for every individual to find a job."