1Amending the act of December 31, 1965 (P.L.1257, No.511),
2entitled "An act empowering cities of the second class, 
3cities of the second class A, cities of the third class, 
4boroughs, towns, townships of the first class, townships of 
5the second class, school districts of the second class, 
6school districts of the third class and school districts of 
7the fourth class including independent school districts, to 
8levy, assess, collect or to provide for the levying, 
9assessment and collection of certain taxes subject to maximum 
10limitations for general revenue purposes; authorizing the 
11establishment of bureaus and the appointment and compensation 
12of officers, agencies and employes to assess and collect such 
13taxes; providing for joint collection of certain taxes, 
14prescribing certain definitions and other provisions for 
15taxes levied and assessed upon earned income, providing for 
16annual audits and for collection of delinquent taxes, and 
17permitting and requiring penalties to be imposed and 
18enforced, including penalties for disclosure of confidential 
19information, providing an appeal from the ordinance or 
20resolution levying such taxes to the court of quarter 
21sessions and to the Supreme Court and Superior Court," 
22further providing for income tax rate limits; and requiring a 
23referendum under certain circumstances.

24Section 1. Section 404(b) of the act of December 31, 1965
25(P.L.1257, No.511), known as The Local Tax Enabling Act, added
26October 15, 2008 (P.L.1615, No.130), is amended to read:

27Section 404. Income tax rate limits.

28* * *

29(b) Calculation of maximum earned income tax rate.--The

1maximum earned income tax rate shall be determined by taking the
2sum of the rates calculated under paragraphs (1) and (2) and
3limited by paragraph (3):

4(1) The rate of the earned income tax that would have
5resulted in the collection by the political subdivision of an
6amount equal to the amount collected from the occupation tax.
7The calculation by a school district under this paragraph
8shall be made using [actual revenue collections for the
9fiscal year ending in 2002. The calculation by a municipality
10under this paragraph shall be made using actual revenue
11collections for the calendar year ending December 31, 2001.]
12the average of the actual revenue collections for the two 
13fiscal years immediately prior to the date of the referendum 
14under section 407. The calculation by a municipality under 
15this paragraph shall be made using the average of the actual 
16revenue collections for the two calendar years immediately 
17prior to the date of the referendum under section 407.

18(2) The rate at which the earned income tax was
19collected by a school district for the fiscal year [ending in
202002 or the rate at which the earned income tax was collected
21by a municipality for the calendar year ending December 31,
222001.] immediately prior to the date of the referendum under 
23section 407 or the rate at which the earned income tax was 
24collected by a municipality for the calendar year immediately 
25prior to the date of the referendum under section 407.

26(3) The tax rate determined under paragraphs (1) and (2)
27shall be rounded off to the nearest increment of ten
28hundredths of one percent.

29The maximum rate of the earned income tax calculated under this
30subsection shall not be subject to the limits on the earned

1income tax specified under section 311(3).

2* * *

3Section 2. The act is amended by adding a section to read:

4Section 407.1. Referendum required.

5(a) Question authorized.--If a political subdivision levied
6the occupation tax on July 1, 2011, the county board of
7elections of the county in which the political subdivision is
8located shall prepare a ballot question on whether to eliminate
9the occupation tax and obtain replacement revenue by an increase
10in the earned income tax.

11(b) Replacement revenue.--

12(1) Representatives of the county board of elections
13shall contact the governing body of the political subdivision
14to calculate the additional amount of earned income tax
15necessary to replace the revenue generated by the occupation
16tax as provided under section 404.

17(2) If the governing body fails to provide the
18information in a timely manner, representatives of the county
19board of elections shall calculate the rate of the earned
20income tax as provided in section 404.

21(c) Ballot question.--The county board of elections shall
22place the question on the ballot at the municipal election held
23in November 2013.

24(d) Contents of question.--The referendum question must
25state the maximum rate of the earned income tax calculated under
26section 404 and that the additional revenue generated by an
27increase in the earned income tax will be used to eliminate the
28occupation tax. The question shall be in clear language that is
29readily understandable by a layperson. For the purpose of
30illustration, a referendum question may be framed as follows:

1Do you favor increasing the rate of the earned income tax
2to a maximum of X% with the requirement that the increase
3be used to eliminate the occupation tax?

4(e) Vote.--

5(1) If a majority of the electors voting on the question
6vote "yes," the governing body shall be authorized to
7implement an increase in the earned income tax under section
8404 and shall be required to eliminate the occupation tax as
9required under section 405.

10(2) If a majority of the electors voting on the question
11vote "no," the governing body shall have no authority to
12increase the rate of the earned income tax above the maximum
13rate otherwise provided by law.

14(f) Voting proceedings.--Proceedings under this section
15shall be in accordance with the provisions of the act of June 3,
161937 (P.L.1333, No.320), known as the Pennsylvania Election
17Code.

18(g) Public notice.--

19(1) Prior to the consideration of a ballot question
20under this section, the county board of elections shall give
21notice of the pending ballot question. The notice shall be
22given in addition to all other notices required under law and
23shall set forth the substantial nature of the tax to be
24imposed, the reason which, in the judgment of the governing
25body of the political subdivision, necessitates the
26imposition of the tax and the amount of revenue estimated to
27be derived from the tax and the tax to be repealed.

28(2) Publication of the notice shall be made by
29advertisement once a week for three weeks in a newspaper of
30general circulation within the political subdivision or, if

1no newspaper of general circulation exists within the
2political subdivision, in a newspaper of general circulation
3within the county in which the advertising political
4subdivision is located.

5Section 3. This act shall take effect in 60 days.