Financial, tax relief proposed for Pennsylvania small businesses

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A group of Republican senators said this week the state of Pennsylvania should deliver more financial and tax relief to small businesses struggling amid the pandemic.

The Prioritize PA: Small Business Initiative, a package of five bills, does just that, says co-sponsoring Sens. Ryan Aument, R-Lititz; Camera Bartolotta, R-Washington; Judy Ward, R-Hollidaysburg; and Kristin Phillips-Hill, R-Jacobus.

“As we celebrate moving toward herd immunity, reopening our economy, and returning to a sense of normalcy again, we must not forget our small businesses, particularly those in the hospitality industry, that have suffered immensely throughout this pandemic,” Aument said. “The punitive mitigation efforts from this administration have unfairly and disproportionately harmed our once thriving small business community, and it is my hope that the bills in this package will provide both the immediate and long-term relief that they so desperately need.”

The bills would revamp tax laws to expand deductions and offset net operating losses for businesses that faced financial hardship as a result of Gov. Tom Wolf’s pandemic mitigation orders. Another measure would waive state fees for retail food and liquor licenses.

The package also would create two new relief funds: a $500 million no-interest loan program and a temporary business improvement tax credit that would encourage profiting establishments to make donations to struggling businesses and receive a 50% state tax credit in return.

“Many small businesses that have been profitable for years are now seeing losses that are entirely due to COVID-19,” Ward said. “Small shops and mom-and-pop operations do not have massive amounts of savings; they are holding on by a thread. We cannot allow these families to lose everything they have worked so hard to build.”

The announcement came as Wolf said he’d raise capacity limits and ease restrictions on alcohol sales at bars and restaurants after a year of strict mitigation orders.

Federal labor statistics show the hospitality industry shed 30% of its workforce in 2020 as a result of pandemic restrictions. In Pennsylvania, it’s among the industries hardest hit.

A second report from the Allegheny Policy Institute concluded the job market in Pennsylvania shrank across all sectors in 2020, rivaling record lows set during the Great Recession a decade earlier. The Department of Labor and Industry estimates the state lost 500,000 jobs last year that may never return.

The senators blamed the administration’s orders – considered some of the most restrictive in the nation – for putting small businesses at a disadvantage compared to big box stores. They also pointed to the governor’s proposed solutions, such as raising the minimum wage to $15 an hour or increasing personal income taxes on the top third of earners, as more “serious blows” to small businesses trying to survive.

“We have heard from so many of our small business owners about the devastation caused by the pandemic and Gov. Wolf’s heavy-handed response to it,” Bartolotta said. “Our bill provides the kind of immediate relief our smaller employers need to level the playing field and help them recover and rebuild.”

Wolf defended his proposals as an expansion of tax forgiveness for 2.2 million filers, small business owners included, and said raising the wage will lift 1 million workers out of poverty. He said paying workers a low hourly rate is “bad for business.”

A final proposal would create an Independent Office of the Repealer to identify and undo “outdated or onerous” regulations.

“Regulations are a self-made problem that are in part the result of choices made by the legislative branch of government,” Phillips-Hill said. “As a result, state agencies develop rules and regulations that place new burdens on small businesses. We must reverse this trend of growing regulations and the negative impact that it has on our economy.”

Both the Pennsylvania Manufacturers Association and the Pennsylvania Restaurant and Lodging Association lent their support to the bills.

“There are many challenges that entrepreneurs face as they begin to recover and reopen to full capacity,” PMA President David Taylor said. “But with every challenge comes an opportunity to rethink and better support our many industries. We certainly cannot tax our way out of this unfortunate situation, but with robust and sustained economic growth, our businesses can recover, our citizens can obtain meaningful work, and our state revenues will reflect this success.”

PRLA CEO John Longstreet called the package “a coordinated approach” that would “improve and revitalize the state’s economic climate.”

The bills come amid the Senate’s annual budget hearing schedule in which the chamber grills state agencies about the governor’s proposed budget. While Republicans have pushed back against any effort to raise taxes, it’s unclear how the state will balance its projected deficit, though administration officials remain intent on defending Wolf’s policies as pro-jobs.

“This isn’t just because of the governor’s lockdown,” Labor Secretary Jennifer Berrier said. “We are in the midst of a global pandemic. There’s research that shows individuals were staying home. I want to be clear this wasn’t just a result of the governor’s well-thought-out mitigation orders.”

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