PRINTER'S NO. 2690
No. 1947 Session of 2005
INTRODUCED BY GERGELY, KOTIK, BEBKO-JONES, CALTAGIRONE, CASORIO,
DALEY, DeLUCA, DIVEN, FABRIZIO, GOODMAN, GRUCELA, HARHAI,
HARRIS, HUTCHINSON, LaGROTTA, McCALL, PALLONE, PETRARCA,
PETRONE, PISTELLA, READSHAW, REED, ROBERTS, SANTONI,
SCAVELLO, SIPTROTH, SHANER, SOLOBAY, T. STEVENSON, SURRA,
TIGUE, WILT AND YUDICHAK, SEPTEMBER 26, 2005
REFERRED TO COMMITTEE ON FINANCE, SEPTEMBER 26, 2005
AN ACT
1 Providing for prohibition of levy or collection of tax on
2 homestead property; establishing the Homestead Property Tax
3 Elimination Fund; providing for imposition of sales and use
4 tax, for increase in personal income tax and for transfer of
5 certain slot machine gaming revenue; and making a related
6 repeal.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Short title.
10 This act shall be known and may be cited as the Homestead
11 Property Tax Elimination Act.
12 Section 2. Definitions.
13 The following words and phrases when used in this act shall
14 have the meanings given to them in this section unless the
15 context clearly indicates otherwise:
16 "Fund." The Homestead Property Tax Elimination Fund
17 established under section 4.
18 "Homestead property." The owner-occupied, primary residences
1 and the parcel of land within this Commonwealth on which the
2 residence is located and other improvements located on the
3 parcel. If a portion of the structure is used for a
4 nonresidential purpose, the homestead is equal to that portion
5 of the property used as the primary residence of the owner-
6 occupant. The term "homestead" shall have no effect, evidentiary
7 or otherwise, concerning the issue of whether property
8 constitutes a homestead or homestead property under any other
9 act. The term "homestead" shall include the owner-occupied
10 primary residence on a farmstead as defined in 53 Pa.C.S. § 8582
11 (relating to definitions) but shall not include any other real
12 property on a farmstead.
13 "Political subdivision." Any county, city, borough,
14 incorporated town, township, school district, vocational school
15 district and county institution district.
16 Section 3. Property tax prohibition.
17 (a) Levy.--Notwithstanding any other provision of law to the
18 contrary, no political subdivision may levy or collect any tax
19 on homestead property for any purpose after June 30 of the
20 calendar year immediately following the effective date of this
21 section.
22 (b) Collection.--Nothing in this act shall be construed to
23 prohibit a political subdivision from collecting delinquent
24 taxes on homestead property levied in any fiscal year preceding
25 the fiscal year in which the prohibition under subsection (a)
26 applies.
27 Section 4. Homestead Property Tax Elimination Fund.
28 (a) Establishment.--There is hereby established in the
29 Treasury Department a special fund to be known as the Homestead
30 Property Tax Elimination Fund.
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1 (b) Custodian.--The State Treasurer shall be the custodian
2 of the fund, which shall be subject to the provisions of law
3 applicable to funds listed in section 302 of the act of April 9,
4 1929 (P.L.343, No.176), known as The Fiscal Code.
5 (c) Roles of Department of Revenue and State Treasurer.--
6 Taxes imposed under sections 5 and 6 shall be received by the
7 Department of Revenue and paid to the State Treasurer and, along
8 with interest and penalties and any refunds and credits paid,
9 shall be credited to the fund no less frequently than quarterly.
10 (d) Interest.--During any period prior to the credit of
11 moneys to the fund, interest earned on moneys received by the
12 Department of Revenue and paid to the State Treasurer under this
13 act shall be deposited into the fund.
14 (e) Money in the fund.--All money in the fund, including,
15 but not limited to, money credited to the fund under this
16 section, prior year encumbrances and interest earned thereon
17 shall not lapse or be transferred to any other fund but shall
18 remain in the fund and used exclusively as provided in this act.
19 (f) Investment of funds.--Pending disbursement, money
20 received on behalf of or deposited into the fund shall be
21 invested or reinvested as are other funds in the custody of the
22 State Treasurer in the manner provided by law. All earnings
23 received from the investment or deposit of such funds shall be
24 credited to the fund.
25 (g) Borrowing of funds.--The State Treasurer shall be
26 authorized to borrow money from the General Fund in the event
27 the money in the fund is insufficient to make the distribution
28 required under section 8. Such borrowing shall be repaid with
29 interest to the General Fund at the earliest practicable date.
30 (h) Use of funds.--The Department of Revenue and the State
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1 Treasurer may use a portion of the revenues in the fund for
2 costs associated with administering this act.
3 Section 5. Sales and use tax.
4 (a) Tangible personal property or services.--In addition to
5 any other tax currently levied by the Commonwealth under Article
6 II of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
7 Reform Code of 1971, there shall be imposed upon each separate
8 sale at retail of tangible personal property or services as
9 defined in Article II of the Tax Reform Code of 1971 a tax on
10 the purchase price of 2%.
11 (b) Purchases at retail.--In addition to any other tax
12 currently levied by the Commonwealth under Article II of the Tax
13 Reform Code of 1971, there shall be imposed upon the use of
14 tangible personal property purchased at retail and on services
15 purchased at retail as defined in Article II of the Tax Reform
16 Code of 1971, a tax on the purchase price of 2%. The use tax
17 imposed under this subsection shall not be paid over to the
18 Commonwealth by any person who has paid the tax imposed under
19 subsection (a) or has paid the tax imposed under this subsection
20 to the vendor with respect to the use.
21 (c) Exclusions.--All exclusions enumerated under section 204
22 of the Tax Reform Code of 1971 shall apply to the sales and use
23 tax levied under this act.
24 (d) Deposit of revenue.--The revenue generated through the
25 tax levied pursuant to this section shall be deposited into the
26 fund for purposes of replacing revenues lost by all political
27 subdivisions based on the property tax prohibition set forth in
28 section 3.
29 Section 6. Personal income tax.
30 (a) Additional income tax.--In addition to any other tax
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1 currently levied by the Commonwealth under Article III of the
2 act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
3 of 1971, there is hereby levied a tax of 1% on each class of
4 income as defined in Article III of the Tax Reform Code of 1971.
5 (b) Poverty provisions.--The special tax provisions for
6 poverty set forth in section 304 of the Tax Reform Code of 1971
7 shall apply to the personal income tax levied pursuant to this
8 section.
9 (c) Deposit of revenue.--The revenue generated through the
10 tax levied under this section and through the increase in the
11 rate of tax levied on personal income under section 302 of the
12 Tax Reform Code of 1971, from 2.8% to 3.07% shall be deposited
13 into the fund established under section 4 for purposes of
14 replacing the revenues lost by all political subdivisions based
15 on the property tax prohibition set forth in section 3.
16 Section 7. Transfer of slot machine gaming revenue.
17 Annually, all revenue deposited in the Property Tax Relief
18 Fund pursuant to 4 Pa.C.S. § 1409 (relating to Property Tax
19 Relief Fund) shall be transferred to the Homestead Property Tax
20 Elimination Fund for purposes of replacing revenue lost by all
21 political subdivisions based on the property tax prohibition set
22 forth in section 3.
23 Section 8. Disbursements from fund.
24 (a) Certifications by political subdivisions.--No later than
25 June 30, 2006, each political subdivision shall calculate the
26 amount of revenue the political subdivision will lose in the
27 upcoming fiscal year based on the homestead property tax
28 prohibition under section 3 and certify the amount to the State
29 Treasurer. The calculation shall be based on the homestead
30 property tax collections for the 2005-2006 fiscal year.
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1 (b) Duties of State Treasurer.--
2 (1) Each year the State Treasurer shall adjust the
3 calculation originally certified under subsection (a) by the
4 percentage change in the Statewide average weekly wage as
5 calculated by the Department of Labor and Industry under
6 section 404(e)(2) of the act of December 5, 1936 (2nd
7 Sp.Sess., 1937 P.L.2897, No.1), known as the Unemployment
8 Compensation Law.
9 (2) No later than July 15 of each year, the Treasury
10 Department shall reimburse each political subdivision for the
11 total amount of revenue lost by the political subdivision
12 based on the property tax prohibition under section 3.
13 Section 9. Notice.
14 If a constitutional amendment prohibiting any political
15 subdivision from levying a tax on homestead real property is
16 ratified by the electorate, the Secretary of the Commonwealth
17 shall transmit notice of the ratification to the Legislative
18 Reference Bureau for publication in the Pennsylvania Bulletin.
19 Section 10. Repeals.
20 (a) Specific.--Repeals are as follows:
21 (1) The General Assembly declares that the repeal under
22 paragraph (2) is necessary to effectuate section 3.
23 (2) The act of July 5, 2004 (P.L.654, No.72), known as
24 the Homeowner Tax Relief Act, is repealed.
25 (b) Inconsistent.--All acts and parts of acts are repealed
26 insofar as they are inconsistent with this act.
27 Section 11. Effective date.
28 This act shall take effect as follows:
29 (1) The following provisions shall take effect
30 immediately:
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1 (i) Section 1.
2 (ii) Section 9.
3 (iii) This section.
4 (2) The remainder of this act shall take effect upon
5 publication of the notice under section 9.
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