Read Their Lips: No Pa. Sales Tax on Newspapers

By: E&P Staff Pennslyvania newspaper publishers are gearing up for a bruising legislative fight over Gov. Ed Rendell's plans to extend the state sales tax to newspapers.

The Mid-Atlantic Community Paper Association is positioning the sales tax on newspapers as a blow against local merchants.

"Taxing advertising will absolutely devastate the Mom and Pop merchants struggling to compete on Main Street, " Jim Haigh, the association's government relations consultant. "How does the Governor think businesses connect with consumers? They advertise. I'm glad he appreciates the critical nature of food in human sustenance, but for commerce as well as tax purposes, he needs to understand advertising shares the same vital function."

Newspapers are just one category of goods and services that would be subject to the Pennsylvania sales tax for the first time. In his budget message this week, Rendell is proposing to include 73 more taxable items, ranging from caskets to stair lift devices to veterinary fees.

Rendell's proposal would lower the sales tax to 4% from 6% while extending its reach.

"We appreciate the dire situation and that tough choices need to be made -- but strangling already struggling small businesses runs directly counter to his stated claims of not wanting to 'lose momentum' we're barely gripping in this economy," Haigh said. "In reality, the 74 goods and services bull-eyed for new taxing are substantially different than his cherry-picked examples -- the unintended consequence will be more job loss and a downward spiral on tax receipts."