Skill games account for a large revenue stream that is currently unregulated in the Commonwealth of Pennsylvania.
Governor Shapiro recently proposed a 52% tax rate on unregulated “skill games” that are bringing in significant revenue across the state.
Pennsylvania is currently on its third week of budget hearings in the state Capitol in Harrisburg. The hearings follow Shapiro’s early February budget address that brought the skill games tax proposal.
On Tuesday, Revenue Secretary Pat Browne told lawmakers he thought the 52% tax rate proposed by Shapiro was “consistent and fair tax policy” because other similar machines are taxed at the same rate.
State Representative Jamie Barton, a Republican of Schuylkill County, told Browne that the proposal reminded him of the saying “pigs get fat and hogs go to slaughter.”
Barton criticized Shapiro’s proposal, saying that the high tax rate would decrease activity rather than allow the state to make money.
Republicans have been critical of the governor’s spending plan because the state’s expenditures far exceed expected revenues under the proposal. The plan also draws $4.5 billion from the state’s Rainy-Day Fund, relying on emergency funds for the fiscal year.
Shapiro’s proposal anticipates nearly $766 million in revenue for Pennsylvania from regulating and taxing skill games machines.
“Skill games are a part of the revenue of a lot of businesses. Small family businesses. Fire companies. VFWs. Restaurants. American Legions,” said Barton in opposition to Shapiro’s proposed tax rate on the unregulated machines.
Barton asked Browne whether the state had studied what a tax rate of 52% would do to the market. Browne said that no study exists but expects that the market could “sustain” the proposed 52% tax rate.
Governor Shapiro has also proposed legalizing recreational marijuana, which he anticipates would generate $729 million in revenue for Pennsylvania.
Both proposals have become challenging points during negotiations in Harrisburg over the course of this year’s budget hearings.
