Pennsylvania State Senator Proposes Fee for Remittances
FAIR Take | April 2022
In 2019, FAIR estimated that $150 billion a year is sent out of the United States in the form of remittances. Once the money leaves the United States, it permanently leaves our economy because it is no longer used to purchase goods and services here. Generally, monies sent abroad are not taxed since many of the individuals who send money abroad are paid in cash – many times under the table. Federal, state and local governments bear a significant burden with this lost revenue, prompting a prominent state senator in Pennsylvania to introduce legislation to recoup some of these funds by placing a transaction fee on remittances.
Senator Doug Mastriano (R-Gettysburg) introduced Senate Bill (SB) 1158 on March 24. It has been cosponsored by three senators—Mario Scavello (R-Mount Pocono), Kristin Phillips-Hill (R- Stewartstown) and Patrick Stefano (R- Somerset). A companion bill has not yet been introduced in the House.
SB 1158 would:
- Impose a 2% fee on each transaction sent to someone outside the United States, capped at $5,000;
- Require money transmitters to provide the transaction fees they collect on a quarterly basis to the state’s Department of Banking and Securities; and
- Direct all the fee revenue to be deposited in the state’s Property Tax Relief Fund, to be used to specifically to defray residential homeowners’ property taxes and residential tenants’ rental costs.
The bill was referred to the Senate Committee on Banking and Insurance. Committee Chairman Senator John DiSanto (R-New Bloomfield) has yet to schedule a hearing for the bill.
Senator Mastriano says his bill will raise revenue to help Pennsylvanians with rising housing costs as well as act as a deterrent against illegal aliens settling in the state. He proclaimed the bill is “a great way to deter illegal immigration —we can put that new revenue towards tax breaks for legal citizens in our commonwealth.”
In an April 8 press release, Senator Mastriano further noted that “Oklahoma enacted a similar fee on remittances in 2014 and now receives over $13 million in annual revenue for the state. Because Pennsylvania’s estimated illegal immigrant workforce is significantly higher than Oklahoma, revenue generated from SB 1158 would likely result in at least eight times as much annual revenue.”
Republicans control both chambers of the Pennsylvania legislature. In the Senate they control the chamber 28-20. In the House, Republican have 112 seats to 89 for the Democrats. While Republican votes alone are sufficient to pass SB 1158, they do not have a 2/3 supermajority which would be needed to override a possible veto by Governor Tom Wolf (D). However, commonsense legislation like Senator Mastriano’s bill has at times garnered widespread bipartisan support in Pennsylvania. This was the case in 2019 when the legislature passed an E-Verify bill for the state’s construction industry. That bill passed by such a wide margin that Gov. Wolf allowed it to become law without his signature rather than veto it and face a likely override. The governor has not yet publicly stated his position on SB 1158.