Sample Letter to State Senators on Senate Bill 854

Dear Senator:

As a community banker, I write in strong opposition to Senate Bill 854, the proposal passed by the House of Representatives that would impose a new, very expensive, regulatory burden on businesses that would be forced to collect and pay the sales tax under the definition of “management consulting services.”

We are deeply concerned that this very broad definition will be interpreted by the Department of Revenue to include community banks and products we offer to our customers, including but not necessarily limited to bank deposits and other savings vehicles such as IRAs and Certificates of Deposit.

We urge the Senate to take a very global view of this tax and its application to savings vehicles and financial services. At a time when this nation has an extremely low savings rate; in fact, last month it was reported that the nation’s savings rate fell to negative numbers due to the enormous amount of debt that consumers carry, we believe this new tax on savings products is counterproductive and discourages savings when state and federal public policy should be oriented to encouraging Pennsylvanians and Americans to save for the important purchases consumers face including homes, college, and retirement. Saving is also crucial to our businesses to ensure they have access to the capital funds they need to grow their businesses and create jobs.

We believe the new tax in Senate Bill 854 is particularly harmful to Pennsylvania’s community banks and other financial institutions and financial providers. This new burden on Pennsylvania citizens will force those who are sophisticated enough to move their retirement and other savings to out-of-state repository and depository institutions to avoid payment of the tax. We do not believe it is the intent of the General Assembly to encourage an outflow of what could be substantial dollars away from Pennsylvania’s economy to other states. We live in an extraordinarily mobile society that consumers may move their savings with ease, particularly through use of the Internet.

While the focus of our opposition to Senate Bill 854 is on the negative effects it has upon our customers and the tremendous unfair advantage it gives to out-of-state institutions, we are also concerned about the compliance burden it imposes upon community banks. Banking is already one of the most heavily regulated industries in the nation. Another layer of regulation detracts us from our mission of serving as a safe depository for customer funds and recycling those monies back into the communities we serve through mortgages, small business loans and other loan products.

We respectfully urge your opposition to Senate Bill 854 and any other legislative attempts to expand the sales tax upon professional services and businesses including banking. If you have any questions or need further information, please do not hesitate to contact our trade association, the Pennsylvania Association of Community Bankers. Thank you for considering our views.