Core Issue: Taxes
Taxes relative to the real estate transaction, such as the realty transfer tax, and those associated with homeownership, such as the property tax, are a major burden to buyers and homeowners alike. An increase in any industry-related tax would have a negative impact on housing costs and the industry as a whole.
- The proposed 2010-2011 state budget included creation of a Stimulus Transition Reserve Fund to put in place a pool of monies to address budget shortfalls due to the expiration of federal stimulus dollars. One part of the plan included reducing the state sales tax to 4 percent, but expanding it to include 74 currently exempted items, such as professional services. Professional services may have included mortgage origination, attorney fees, home inspections, appraisal fees, title fees, construction services, and similar items included in the real estate transaction. PAR opposed a tax on services because it would drive up the cost of real estate to the consumer. Watch this video to learn more.
On July 6, 2010, Governor Rendell signed the $28.05 billion budget into law without any broad-based tax increases. The governor's proposal to lower the state sales tax rate from 6 percent to 4 percent while expanding the base to include sales tax on services, a provision strongly opposed by PAR, never made it to the final negotiations. A caveat of the agreement reached between the four caucuses and the Governor is an October 1, 2010 deadline to enact Marcellus Shale extraction tax legislation.
The budget includes a $250 million increase for basic education and $600 million in borrowing for economic development programs. Many state agencies and programs received funding cuts. The Rendell administration reported that the budget could result in the elimination of up to 1,000 state positions.