Time to raise the roof: a bill to raise the revenue (necessary to fund the 2017-2018 state budget) is finally before the Governor for his signature. After much debate and round after round of amendments, H.B. 542 passed the House with a vote of Y:102/N:88 and the Senate with a vote of Y:29/N:21 this week and is expected to be signed by the Governor within his constitutionally allotted 10 days. The bill is expected to raise over $1.5 billion in revenue for the Commonwealth in this fiscal year, with the lion’s share of that amount coming from the potential securitization of Tobacco Settlement Funds.
Highlights include:
- Removal of the sales and use tax on help desk and call center services separately invoiced from the purchase of canned software;
- Excludes the sale of kegs of beer from sales tax;
- Requires the collection and remission of sales tax by remote sellers and marketplace facilitators;
- Allows a personal income tax exclusion for contributions to an ABLE (Achieving a Better Life Experience) account;
- Makes the following income tax check offs permanent: Wild Resource Conservation Fund: Organ and Tissue Donation Awareness Fund; Military and Family Relieve Assistance Fund; Children’s Trust Fund and the American Red Cross;
- Requires that entities making royalty payments on property in Pennsylvania to non-Pennsylvania residents in excess of $5,000 to withhold personal income tax on the payments;
- Amends the provisions of the Tax Code related to net operating losses to address a recent court decision by removing the $5 million cap on net operating losses and increases the current 30% cap to 35% for tax year 2018, and 40% for tax year 2019 and each year going forward;
- Establishes a new “Manufacturing Innovation and Reinvestment Deduction” for taxpayers making a capital investment of over $100 million in manufacturing projects;
- Allows the Department of Revenue to make sure all taxes due have been paid and all required reports have been submitted before awarding tax credits;
- Provides for the designation of “Film Production Tax Credit Districts” and recodifies provisions related to the Entertainment Economic Enhancement Program;
- Provides that excess money utilized for a CRIZ (City Revitalization and Improvement Zone) pilot zone does not have to be returned to the state and should be utilized within the zone;
- Provides that parcels within a NIZ (Neighborhood Improvement Zone) may be transferred out and replaced with parcels not to exceed the acreage transferred out of the zone;
- Extends the date to apply for a Keystone Opportunity Zone designation from October 2016 to October 2018, and extends the date for approval by the Department of Community and Economic Development from December 2016 to December 2018;
- Imposes a new fee, calculated by the length of rental, on carsharing services;
- Imposes a 12% tax on the sale of fireworks; and
- Authorizes the Commonwealth Financing Authority to securitize payments form the Tobacco Settlement Agreement.