A proposed new state tax on national oil company profits has been attacked by Republicans, who say it's impractical, possibly illegal and likely to result in higher gas prices.
A report from a progressive think tank suggests none of those fears are accurate.
The Pennsylvania Budget and Policy Center says the "gross profits tax" would be a "good funding source" for Pennsylvania's public transit systems.
The 6.17 percent levy on the percentage of profits derived from a firm's Pennsylvania business would relieve the company from paying corporate net income tax, but the total tax paid would be much higher.
Researcher Sharon Ward says world demand for oil is so high right now - and refining capacity so low - that oil company profits will remain high and absorb the impact of any change to Pennsylvania law.
"Some lawmakers are concerned that the tax will translate into higher prices at the pump. The issue is much more complex than the discussion has been to date. We use what we believe is a more economically sound model. We think that the bulk of the tax, perhaps as much as 90
percent, will be paid by shareholders, not drivers," Ward says.
So far, the oil profits tax has attracted few fans in the legislature, but many mass transit systems have cut or are cutting service, so some kind of action is expected this summer.
As state budget negotiations pause briefly for the holiday in Harrisburg, Pennsylvania's chambers of commerce are pushing for
business-friendly approaches.
Chamber leaders gathered at the Capitol to lobby against much of Governor Rendell's proposed budget.
They said they have a different philosophy when it comes to how the state should be spending money.
Pennsylvania Chamber of Business and Industry vice president Gene Barr said people will be poorly served and negatively affected by higher taxes or fees.
"Letting the free-market system work makes the most sense for Pennsylvania - trusting on the resources and ingenuity of its citizens and letting its citizens make the best decisions about themselves and their families will be the engine that drives Pennsylvania forward. And
state chambers and local chambers are a critical piece of that economic engine driving forward," Barr said.
House Democrats are pointing out that the spending plan they forwarded to the Senate did not contain the sales tax increase originally suggested by Rendell.
The administration says a revenue surplus means the budget can be balanced without that tax hike.
