If a Lehigh Valley senator’s latest proposal is successful, Pennsylvania could see two months with no sales tax this year.
State Sen. Lisa Boscola’s office on Tuesday announced her plans to introduce legislation creating a two-month sales tax holiday. If approved, the proposal would mean Pennsylvania suspends its 6% sales tax in June and July 2022.
A Lehigh University economics professor who reviewed the idea said it could end up doing more harm than good, since it could spur spending and worsen the imbalance between supply and demand that is a root cause of inflation. That’s why government policymakers generally leave controlling inflation to the Federal Reserve and banks that are not bound to constituent opinions or election cycles, said economics Professor Ahmed Rahman.
“It’s a temptation to try to do these policies that seem on the surface to create benefits to their constituents when in the longer or even pretty medium term they will ultimately do them great harm,” Rahman told lehighvalleylive.com.
Boscola, D-Lehigh/Northampton, said she proposes the sales tax holiday to coincide with end of the current fiscal year and the beginning of the next fiscal year, which starts July 1. The state is projected to run surpluses this year and next of more than $2 billion, presenting an opportunity to cut the effects of an annual inflation rate at its highest point since February 1982, she said.
“This proposed tax holiday, over the summer months, will allow all families to enjoy a few extra dollars in their pockets,” Boscola said in a statement from her office.
“It is pretty clear everyone is hurting from the effects of inflation,” she continued. “Whether you are a teacher, police officer, iron worker, warehouse worker, retiree or recent college grad, everything you need is more expensive.
“I was looking for a way for the state government to provide some temporary relief for everyone without creating a new program or application process. Price increases are impacting everyone’s bottom line and while state government cannot fix monetary policy or national product shortages, we can find ways to help our families without creating red tape.”
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Kurt Bresswein may be reached at kbresswein@lehighvalleylive.com.