HARRISBURG, PA – Rather than looking for new things to tax and mandates to impose in the 2010-11 state budget, members of the Pennsylvania Chamber of Business and Industry would like to see the Rendell administration and state lawmakers focus instead on fostering private-sector job creation that will lead to lasting economic prosperity.

"Throughout his budget address, Gov. Ed Rendell called for various new taxes, citing as his rationale the fact that other states have implemented similar taxes," said Gene Barr, PA Chamber vice president of government and public affairs. "It would be wonderful for the Commonwealth's businesses and residents if, even beyond the scope of the state budget, the administration placed similar emphasis on emulating the positive steps other states have taken to improve their overall competitiveness."

Barr said government can clear the way for job creation and economic growth through commonsense permitting, lawsuit abuse and real business tax reform.

"Taken as a whole, this budget would not improve Pennsylvania's job creation climate," Barr said.

One reason: Rendell's call for combined reporting, which would merely create winners and losers within the tax system and impact companies that do not have passive investment (Delaware holding) companies.

"In many cases, combined reporting is a solution looking for a problem," Barr said. "While the business community more than welcomes any reduction in the uncompetitive Corporate Net Income tax, doing so in conjunction with combined reporting would do little to improve the state's overall business climate."

Barr also stressed that there is no guarantee combined reporting would bring in additional revenue for the state, as some companies could actually see their tax burden lowered under combined reporting. Further, when compared to other states that have adopted combined reporting, Pennsylvania's proportion of corporations that do not pay the Corporate Net Income tax is typical.

Taking a page from the governor's own budget remarks, the PA Chamber seeks an end to the misinformation that is repeatedly disseminated by combined reporting supporters with regard to payment of the CNI.

"It is counterproductive to a sound debate on a very complex subject to repeat time and time again that a certain percentage of businesses do not pay the CNI without fully explaining that many of these companies have either lost money or broke even and therefore have no tax liability," he stressed.

In addition to concerns over combined reporting, the PA Chamber also expressed opposition to increasing the sales tax base to include businesses services, as this would hurt many businesses, particularly small businesses, which are the backbone of job creation in the Commonwealth. The governor further proposes to penalize businesses by eliminating the vender discount, a program that reimburses businesses for costs incurred in collecting the state sales tax.

The Chamber also urges lawmakers to proceed with caution in considering a tax on Marcellus Shale in order to avoid harming an industry that holds tremendous economic potential for the Commonwealth, and reiterated its call in general for a focus on private-sector job creation.

Since December 2007, more than seven million private sector jobs have disappeared nationwide, according to the Bureau of Labor Statistics.

"The governor was right when he said Pennsylvania is not out of the woods," Barr said. "The budget for the upcoming fiscal year must reflect the importance of private-sector job creation to realizing full and lasting recovery."

The budget outlined by the governor represents a $1.2 billion increase over the current fiscal year budget.

"Spending money we don't have is not a wise choice given the current economic climate," Barr said, adding that a majority of PA Chamber members who responded to a survey on the 2010-11 budget indicated that reduced government spending is a top priority.

"The business community welcomes the opportunity to work with the Rendell administration and state lawmakers in the months ahead to craft a budget that will move Pennsylvania forward during these still challenging economic times while not placing greater short-term or long-term burdens on business and individual taxpayers."

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Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of Business.