Inquirer Editorial: Marijuana levy can't take the place of tax reform

Many Pennsylvanians have often wondered what their elected officials in Harrisburg might be smoking given their lethargic approach to solving the state's fiscal problems. A proposal to tax marijuana to help close the budget gap could increase that speculation.

Auditor General Eugene DePasquale says the state could harvest $200 million a year by legalizing and taxing recreational marijuana. The idea might work, if the state Liquor Control Board isn't in charge. But the timing of the proposal, considering the current opioid crisis, is way off. There's little evidence that marijuana use leads to heroin addiction, but some people will put DePasquale's idea in that context.

It would make sense for the state to consider decriminalizing marijuana use to some degree. Philadelphia did that in 2014 after coming to the conclusion that police could better use their time by solving bigger crimes, instead of destroying educational and employment opportunities for people who were busted for possessing small amounts of pot.

DePasquale's idea could take years to implement and become yet another distraction Harrisburg uses as an excuse to keep from tackling budget problems head-on. Not only does the state have a $3 billion structural deficit, its pension system is chock-full of holes drilled by politicians at all levels of government who shirked their responsibility to adequately fund pension plans.

Every fiscal problem seems to have roots in the legislature's failure to modernize the state's tax structure. Gov. Wolf's $32.3 billion general fund budget rightly calls for a fairer tax system, but so far his words seem to have fallen on deaf ears.

How messed up is Pennsylvania's tax system? A person who rents a storage unit must pay taxes on the transaction, but a company renting the same unit does not. That's just one illustration of the tax breaks available to businesses, but not families.

Corporate taxes are largely shouldered by Pennsylvania's small businesses because bigger companies shelter their incomes in other states, particularly Delaware. As a result, about 70 percent of the companies doing business in Pennsylvania pay no corporate taxes.

Wolf wants to get rid of the so-called Delaware loophole while lowering the overall corporate tax rate from 9.99 percent to 6.49 percent. Lowering Pennsylvania's business tax rate from one of the highest in the nation to the middle of the pack makes sense. Getting big corporations to pay taxes lifts some of the burden on small businesses and families.

Of course, the state's most egregious tax break is its gift to the natural gas industry. Pennsylvania is the only major gas-producing state without a severance tax. Wolf wants drillers to pay a 6.5 percent severance tax, which would generate nearly $300 million, but they could subtract an existing impact fee from their tax bills.

Wolf's reasonable ideas may go up in smoke. Some legislators seem to be in the gas industry's pocket. Others want to run to replace Wolf and won't do anything that makes him look good. As a result, tax reform may be more of pipe dream than taxing marijuana. That's just wrong. Legislators need to get their heads out of the clouds and do their jobs.