Economy
1:59 pm
Fri February 17, 2012

Electric Deregulation, Fewer Landlines Cause Drop In Tax Revenue

A little known state tax is seeing a shortfall for the second year in a row. The drop off is due in part to electric deregulation that went into full effect in Pennsylvania a little more than a decade ago.

Deregulation introduced a number of companies to the state's tax rolls, but with their historically narrow profit margins, the amount of taxes they had to pay was low last year and will be low again this year.

The move to a competitive electricity market in Pennsylvania in the last several years resulted in a dip in corporate taxes as smaller companies were introduced to the market.

The Department of Revenue expects their tax contribution to jump by about 30 percent next year.

According to State Budget Secretary Charles Zogby, the growing number of people dropping their landlines in favor of smart-phones is also partly to blame for a shortfall in the commonwealth's tax revenue.

"These phones, the data plans that we all now enjoy on our phones that don't have the same tax coverage as it used to, that's leading to an erosion of revenues, so we are looking at a shortfall," said Zogby.

Federal law prohibits the taxation of Internet access and therefore, of phone data plans.

As a result, Pennsylvania is expecting about 70 million dollar deficit in its Gross Receipts Tax revenue this year.