Finance Committee Reports Four Bills

Panel endorses lifting tax on "Goodwill," tax credits for REAP

The Senate Finance Committee today approved four bills and sent them on to the full Senate for consideration, according to Senator Pat Browne, R-16th District and Committee Chairman.

Senate Bill 97, sponsored by Senator Don White, would clarify that the bank shares tax should not be imposed upon the "goodwill" generated under the purchase method of accounting for acquisitions.

In 2001, the Financial Accounting Standards Board (FASB) issued a ruling (FAS 141 Business Combinations) which made purchase accounting mandatory for business combinations after June 30, 2001. As a result of the purchase accounting rules, taxable equity and goodwill are now taxable when banks are merged.

"This is an important change that is necessary to protect Pennsylvania's economy," Senator Browne said. "As it stands now, the system of taxing goodwill negatively impacts banks headquartered here and it is a discouragement for future mergers and acquisitions."

Senate Bill 375, sponsored by Senator Lisa Boscola, amends the Volunteer Firefighters Relief Association Act to provide for a permanent exemption from certain taxes for qualifying organizations. Currently, those organizations must file for the exemption every five years.

Senate Bill 690, sponsored by Senator Michael Waugh, would create the Resource Enhancement and Protection Tax Credit Program (REAP), which would provide credits up to a maximum of $150,000 to encourage private investment in the implementation of best management practices for agricultural operations, the planting of riparian forest buffers and the remediation of legacy sediment in the Chesapeake Bay Watershed.

Senate Bill 961, sponsored by Senator John Eichelberger, would allow the City of Hazelton to increase its earned income taxation rate up to an additional five-tenths percent beyond the maximum rate provided by law, provided that the proceeds are used solely to reduce any taxes assessed and collected under the Municipal Pension Plan Funding Standard and Recovery Act from and after January 1, 2003.

Contact:

Stacey Connors
Committee Executive Director

(717) 787-1349