HARRISBURG—In Pennsylvania, even trout get a tax break.
Exemptions potentially worth billions of dollars in revenue riddle the state sales tax law, and the purchase of brook trout, brown trout and rainbow trout is one of the dozens of transactions that the Legislature has, well, let off the hook.
It's unclear whether anyone benefits anymore from the trout exemption, which has been on the books for nearly three decades and is limited to certain purchases of fish not used as food, according to the state Revenue Department.
But many exemptions affect people across the state, and the purpose of each one is spelled out in the governor's budget.
The $1 billion-plus exemption for most foods and beverages — like the one for clothing — is intended to lighten the burden of basic necessities on Pennsylvania families. The exemption for candy and gum is said to provide uniformity in the taxation of food. The exception for newspapers and magazines is intended "to encourage citizens to be well-informed." Exemptions for manufacturing machinery, equipment and supplies are designed to protect buyers of the finished products from "multiple taxation."
Other exemptions include caskets, textbooks, coal, firewood, prescription drugs and over-the-counter drugs. There is also a blanket exception for services provided by such providers as dry cleaners, undertakers, advertisers, scientific consultants, computer programmers, physicians, hospitals, lawyers, architects, trash collectors, veterinarians and parking lot owners.
Even with the laundry list of loopholes, the 57-year-old sales tax remains one of the most lucrative state levies. It is expected to finance nearly a third of this year's $27 billion budget. Only the personal income tax generates more money.
Rep. Kerry Benninghoff, the House Finance Committee chairman, says sales tax exemptions can stimulate economic development at a fraction of the cost of conventional incentives that the state uses to encourage business expansions and lure new employers.
"People want solutions that are as least painful as possible," the Centre County Republican said.
A bill Benninghoff's committee sent to the full House this week would provide an exemption for sales and service of airplanes, similar to an exemption for helicopters that the Legislature approved in 2009.
Proponents say the airplane exemption is needed to put Pennsylvania on even footing with states that already provide tax breaks to the aviation industry. They say many corporate and private plane owners in Pennsylvania have their planes serviced in states that don't tax such work.
State officials estimate that the proposal would reduce sales tax revenue by $12 million a year. The bill's sponsor argues that it's an investment that would spawn new aircraft maintenance facilities offering good-paying jobs that bolster other tax collections even more.
"No matter what we (lose) on the sales tax, we're going to make it up on the personal income tax and the earned income tax," said Rep. Peter Daley, D-Washington.
As evidence of the helicopter exemption's success, Benninghoff and Daley cite Connecticut-based Sikorsky Aircraft Corp.'s decision last year to consolidate the commercial helicopter side of its business at its Global Helicopters plant in Chester County.
Both lawmakers say the exemption resulted in about 400 new jobs, but a Sikorsky spokesman declined to confirm that.
The spokesman, Paul Jackson, said employment at the Coatesville-area plant has nearly doubled to about 950 people since Sikorsky acquired the facility from another company in 2005, but that the consolidation was part of a larger strategic plan to concentrate its military business in New York and its commercial operations in Pennsylvania.
"Certainly, elimination of the sales tax was among the many factors we considered in planning for the move," he said.
Sen. Mike Brubaker, chairman of the Senate Finance Committee, said he would like to see an independent, top-to-bottom review of the exemptions to winnow out those that can't be shown to retain or create jobs.
He cited the trout exemption as one that may not make the cut at a time budgets are tight and all spending must be scrutinized carefully.
"It's a global issue," said the Lancaster County Republican. "We need to understand (the effect of) everything we do."