Pennsylvania Gov. Edward G. Rendell gave his budget address for Fiscal Year 2009-2010 Feb. 4, 2009. In his address, the governor assured taxpayers that he did not intend to use any broad-based tax increases to close the $2.3 billion projected budget shortfall. He also assured taxpayers that Pennsylvania's personal income tax, state sales tax, and business taxes should see no increases. The governor as well proposed no change to the ongoing phase-out of the Capital Stock and Franchise Tax.

However, the Governor did suggest some tax increases. Specifically, Gov. Rendell proposed to permit counties to impose a sales tax of up to 1 percent, in addition to the state sales tax rate.

The governor also commented that in developing the budget, he welcomes any recommendations from the legislature that would help to raise revenue. To this comment the governor added, "Among some of the ideas that have been shared with me are, for example, amendments that close the enormous tax loopholes that exist for companies located outside the state who do business here." It is unclear exactly what loopholes the member of the legislature had in mind, or what amendments would be necessary to close those loopholes; however, it is likely that combined reporting or add-back legislation could be among the amendments proposed.

Specific tax-increase proposals mentioned by the governor include: a tax on smokeless tobacco, a tax on natural gas extraction from the Marcellus Shale (area geological formation in Pennsylvania where scientists have located large natural gas reserves), and the legalization and taxation of video poker.

A few items of proposed legislation in Pennsylvania may also be of interest.

Senate Bill 160 proposes a constitutional amendment that would allow local taxing authorities to make property tax assessments based on the acquisition price of property. Because of the Pennsylvania Constitution's Uniformity Clause, as the law stands now, Pennsylvania generally may not make such property value assessment changes.

For Pennsylvania personal income tax purposes, Senate Bill 178 proposes an exclusion of one-half of self-employment taxes paid from the net profits class of income.

Other proposed legislation would make changes to Pennsylvania's corporate net income job creation tax credit (Senate Bill 122); would exclude hybrid and electric cars from the state sales tax (House Bill 191); and would change the definition of "purchase price" for sales tax purposes to exclude a coupon or discount, whether or not it is separately stated (House Bill 156).