PRINTER'S NO. 123
No. 129 Session of 1999
INTRODUCED BY MOWERY, HELFRICK, THOMPSON, BOSCOLA, COSTA, CONTI
AND SLOCUM, JANUARY 12, 1999
REFERRED TO FINANCE, JANUARY 12, 1999
AN ACT
1 Authorizing counties to impose sales, use, occupancy, personal
2 income or earned income and net profits taxes; authorizing
3 municipalities to impose personal income, earned income and
4 net profits and municipal service taxes; empowering
5 municipalities to require county sales and use taxes;
6 providing for the levying, assessment and collection of such
7 taxes; providing for the powers and duties of the Department
8 of Community and Economic Development, the Department of
9 Revenue and the State Treasurer; providing an additional
10 exemption from the tax on intangible personal property;
11 exempting political subdivisions from compliance with certain
12 laws that require counties and municipalities to spend funds
13 or that limit the ability of counties and municipalities to
14 raise revenue; limiting reassessments in counties of the
15 second class; and restricting the taxing authority of certain
16 political subdivisions.
17 TABLE OF CONTENTS
18 Chapter 1. General Provisions
19 Section 101. Short title.
20 Section 102. Definitions.
21 Section 103. Scope and limitations.
22 Section 104. Preemption.
23 Section 105. Home rule counties and municipalities.
24 Section 106. Certain rates of taxation limited.
1 Chapter 3. Subjects of Taxation
2 Subchapter A. Tax Authorization
3 Section 301. General tax authorization.
4 Section 302. Continuity of tax.
5 Section 303. Election to participate under act.
6 Section 304. Public referendum requirements for increasing
7 property taxes previously reduced.
8 Section 305. Local tax study commission.
9 Subchapter B. County Sales and Use Tax
10 Section 311. Construction.
11 Section 312. Imposition.
12 Section 313. Situs.
13 Section 314. Licenses.
14 Section 315. Rules and regulations; collection costs.
15 Section 316. Procedure and administration.
16 Section 317. County sales and use tax funds.
17 Section 318. Disbursements.
18 Section 319. Adoption of municipal resolutions.
19 Section 320. Qualified municipalities.
20 Section 320.1. Municipal sales and use tax initiative.
21 Subchapter C. Personal Income Tax
22 Section 321. Construction.
23 Section 322. Local personal income tax.
24 Section 323. Collections.
25 Section 324. Rules and regulations.
26 Section 325. Procedure and administration.
27 Subchapter D. Earned Income and Net Profits Tax
28 Section 331. Earned income and net profits tax.
29 Section 332. Collections.
30 Section 333. Rules and regulations.
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1 Section 334. Procedure and administration.
2 Subchapter E. Municipal Service Tax
3 Section 341. Municipal service tax.
4 Section 342. Multiple employment locations.
5 Section 343. Collection procedures.
6 Subchapters F through I (Reserved)
7 Chapter 5. Credits, Exemptions and Deferrals
8 Subchapter A. Credits and Exemptions
9 Section 501. Credits.
10 Section 502. Cities of the first class.
11 Section 503. Low-income tax provisions.
12 Section 504. Municipal service tax exemption.
13 Section 505. Regulations.
14 Subchapter B. Real Estate Tax Deferral
15 Section 511. Short title of subchapter.
16 Section 512. Findings and legislative intent.
17 Section 513. Definitions.
18 Section 514. Authority.
19 Section 515. Income eligibility.
20 Section 516. Tax deferral.
21 Section 517. Application procedure.
22 Section 518. Contents of application.
23 Section 519. Attachment and satisfaction of liens.
24 Subchapters C through J (Reserved)
25 Chapter 7. Disposition of Tax Revenues
26 Section 701. Sales tax revenues.
27 Section 702. Income tax and municipal
28 service tax revenues.
29 Section 703. Revenue limitation exceptions.
30 Section 704. Methods of reducing real property tax.
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1 Chapter 9. Register for Certain Taxes
2 Section 901. Definitions.
3 Section 902. Register for taxes under this act.
4 Section 903. Information for register.
5 Section 904. Availability and effective period of register.
6 Section 905. Effect of nonfiling.
7 Section 906. Effect of chapter on liability of taxpayer.
8 Chapter 11. Limitations on Spending
9 Section 1101. Definitions.
10 Section 1102. Political subdivisions exempt from certain
11 laws.
12 Section 1103. Statutes relating to revenue raising.
13 Section 1104. Exemptions.
14 Section 1105. Mandate review.
15 Chapter 13. Limits on Real Property Assessments
16 Section 1301. Limits on real property assessments.
17 Chapter 15. Miscellaneous Provisions
18 Section 1501. Effective date.
19 The General Assembly of the Commonwealth of Pennsylvania
20 hereby enacts as follows:
21 CHAPTER 1
22 GENERAL PROVISIONS
23 Section 101. Short title.
24 This act shall be known and may be cited as the Optional
25 Local Tax Enabling Act.
26 Section 102. Definitions.
27 The following words and phrases when used in this act shall
28 have the meanings given to them in this section unless the
29 context clearly indicates otherwise:
30 "Association." As defined in section 301 of the act of March
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1 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
2 "Board of county commissioners." Includes the successor in
3 function to the board of county commissioners in a county which
4 has adopted a home rule charter under the former act of April
5 13, 1972 (P.L.184, No.62), known as the Home Rule Charter and
6 Optional Plans Law, or under 53 Pa.C.S. Pt. III Subpt. E
7 (relating to home rule and optional plan government), but does
8 not include the city council of a city of the first class.
9 "Budgeted revenue." The revenue from taxes actually levied
10 and assessed by a local government unit. The term does not
11 include revenue from:
12 (1) Delinquent taxes.
13 (2) Payments in lieu of taxes.
14 (3) The real estate transfer tax.
15 (4) The Public Utility Realty Tax, commonly known as
16 PURTA.
17 (5) Interest or dividend earnings.
18 (6) Federal or State grants, contracts or
19 appropriations.
20 (7) Income generated from operations.
21 (8) Any other source that is revenue not derived
22 directly from taxes levied and assessed by a local government
23 unit.
24 "Business." As defined in section 301 of the act of March 4,
25 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
26 "Compensation." As defined in section 301 of the act of
27 March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
28 1971.
29 "County." A county-level municipality within this
30 Commonwealth, regardless of classification. The term includes a
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1 county which has adopted a home rule charter or optional plan of
2 government under the former act of April 13, 1972 (P.L.184,
3 No.62), known as the Home Rule Charter and Optional Plans Law,
4 or under 53 Pa.C.S. Pt. III Subpt. E (relating to home rule and
5 optional plan government). The term does not include a county of
6 the first class.
7 "Current year." The calendar year or fiscal year for which
8 the tax is levied.
9 "Department." The Department of Revenue of the Commonwealth.
10 "Domicile." As defined in section 13 of the act of December
11 31, 1965 (P.L.1257, No.511), known as The Local Tax Enabling
12 Act.
13 "Earned income." The classes of income defined as earned
14 income in section 13 of the act of December 31, 1965 (P.L.1257,
15 No.511), known as The Local Tax Enabling Act.
16 "Employer." As defined in section 301 of the act of March 4,
17 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
18 "Governing body." The board of county commissioners,
19 including the successor in function to the board of county
20 commissioners in a county which has adopted a home rule charter
21 under the former act of April 13, 1972 (P.L.184, No.62), known
22 as the Home Rule Charter and Optional Plans Law, or under 53
23 Pa.C.S. Pt. III Subpt. E (relating to home rule and optional
24 plan government), city council, borough council, incorporated
25 town council, board of township commissioners, board of township
26 supervisors, a governing council of a home rule municipality or
27 optional plan municipality or a governing council of any similar
28 general purpose unit of government which may hereafter be
29 created by statute. The term does not include the city council
30 of a city of the first class.
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1 "Home rule municipality." A city, borough, incorporated town
2 or township which has adopted a home rule charter under the
3 former act of April 13, 1972 (P.L.184, No.62), known as the Home
4 Rule Charter and Optional Plans Law, or under 53 Pa.C.S. Pt. III
5 Subpt. E (relating to home rule and optional plan government).
6 "Individual." As defined in section 301 of the act of March
7 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.
8 "Inverse per capita income." A factor determined by dividing
9 the integer one by the per capita income of the municipality as
10 determined by the most recent survey by the Department of
11 Community and Economic Development.
12 "Local Tax Enabling Act." The act of December 31, 1965
13 (P.L.1257, No.511), known as The Local Tax Enabling Act.
14 "Municipal service tax." A tax upon residents and
15 nonresidents employed within a municipality.
16 "Municipality." A city of the second class, city of the
17 second class A, city of the third class, borough, incorporated
18 town, township of the first class, township of the second class,
19 home rule municipality, optional plan municipality, optional
20 form municipality or similar general purpose unit of government
21 which may hereafter be created by statute, except a city of the
22 first class.
23 "Net profits." The classes of income defined as net profits
24 in section 13 of the act of December 31, 1965 (P.L.1257,
25 No.511), known as The Local Tax Enabling Act.
26 "Nonresident." An individual domiciled outside the
27 municipality.
28 "Optional form municipality." A city which has adopted an
29 optional form of government under the act of July 15, 1957
30 (P.L.901, No.399), known as the Optional Third Class City
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1 Charter Law.
2 "Optional plan municipality." A city, borough, incorporated
3 town or township which has adopted an optional plan of
4 government under the former act of April 13, 1972 (P.L.184,
5 No.62), known as the Home Rule Charter and Optional Plans Law,
6 or under 53 Pa.C.S. Pt. III Subpt. E (relating to home rule and
7 optional plan government).
8 "Ordinance." Includes a resolution.
9 "Personal income." Income enumerated in section 303 of the
10 act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
11 of 1971, as returned to and ascertained by the Department of
12 Revenue, subject, however, to any correction thereof for fraud,
13 evasion or error as finally ascertained by the Commonwealth.
14 "Preceding year." The calendar year or fiscal year before
15 the current year.
16 "Register." The register provided for in Chapter 9.
17 "Relative tax effort." The total tax revenues from all
18 sources of a municipality as reported to the Department of
19 Community and Economic Development, divided by the total tax
20 revenues from all sources from all municipalities in the county.
21 "Resident individual." An individual who is domiciled in a
22 municipality.
23 "Statewide average weekly wage." That amount determined
24 annually for each calendar year by the Department of Labor and
25 Industry under section 105.1 of the act of June 2, 1915
26 (P.L.736, No.338), known as the Workers' Compensation Act.
27 "Succeeding year." The calendar year or fiscal year
28 following the current year.
29 "Tax officer." The person, public employee or private agency
30 designated by a governing body to collect and administer the
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1 municipal service tax imposed under this act.
2 "Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
3 known as the Tax Reform Code of 1971.
4 "Taxpayer." An individual required under this act to file a
5 tax return or to pay a tax.
6 "Weighted formula." A formula dividing an allocation into
7 thirds, with one-third based on relative population, one-third
8 based on relative tax effort and one-third based on the relative
9 inverse per capita income.
10 Section 103. Scope and limitations.
11 (a) General rule.--Except as provided in subsections (b),
12 (c), (d), (e), (f) and (g), it is the intent of this act to
13 confer upon each county and municipality the power to levy,
14 assess and collect taxes upon the subjects of taxation set forth
15 in this act.
16 (b) Real estate transfer taxes.--This act does not affect
17 the powers of a municipality to levy, assess and collect a real
18 estate transfer tax, including any real estate transfer tax
19 levied under the authority of section 652.1(a)(4) of the act of
20 March 10, 1949 (P.L.30, No.14), known as the Public School Code
21 of 1949.
22 (c) Amusement taxes.--
23 (1) Notwithstanding any other provision of this act
24 except for paragraph (2), any municipality which has elected
25 to participate under section 303(a) and has on or before
26 January 1, 1997, levied, assessed or collected or provided
27 for the levying, assessment or collection of an amusement tax
28 may continue to levy, assess and collect such tax on such
29 subjects upon which the tax was imposed by the municipality
30 as of January 1, 1997, at a rate not to exceed the rate
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1 imposed by the municipality as of January 1, 1997.
2 (2) In no case may a municipality levy, assess or
3 collect:
4 (i) a tax on admission into an auto racing facility
5 with a seating capacity of more than 25,000 and a
6 continuous race area of at least one mile;
7 (ii) an amusement tax on ski facilities; or
8 (iii) a tax on admission to a ski facility.
9 The provisions of this paragraph shall apply regardless of
10 whether there is an election to participate under section
11 303(a).
12 (d) Mercantile or business privilege taxes on gross
13 receipts.--
14 (1) Nothing in this act shall, either explicitly or
15 implicitly, permit a county or municipality to impose or
16 increase the rate of any mercantile or business privilege tax
17 on gross receipts not otherwise permitted prior to the
18 effective date of this act, nor shall any provision of this
19 act affect the prohibitions on business gross receipts taxes
20 as set forth in section 2 of the Local Tax Enabling Act,
21 section 533 of the act of December 13, 1988 (P.L.1121,
22 No.145), known as the Local Tax Reform Act, the Tax Reform
23 Code and any other relevant act.
24 (2) For the purposes of assessing, levying or collecting
25 the mercantile or business privilege tax as authorized in
26 section 2 of the Local Tax Enabling Act, no county or
27 municipality shall have the authority to levy, assess or
28 collect any mercantile or business privilege tax on the gross
29 receipts or parts thereof:
30 (i) Arising from retail sales as defined by the act
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1 of December 22, 1983 (P.L.306, No.84), known as the Board
2 of Vehicles Act.
3 (ii) Which are from transfers of property between a
4 parent and a subsidiary or between affiliated companies
5 at the same price or cost for which the transferor
6 acquired the property.
7 (iii) Of banks, bank and trust companies, private
8 banks, savings banks or trust companies as defined in the
9 act of November 30, 1965 (P.L.847, No.356), known as the
10 Banking Code of 1965, or of any other institution or
11 entity subject to the supervision of the Department of
12 Banking under the act of May 15, 1933 (P.L.565, No.111),
13 known as the Department of Banking Code, or of any
14 national bank, or of any similar institution or entity
15 established pursuant to Federal law or the law of any
16 state.
17 (iv) Of any malt beverage distributor.
18 (e) Sign or sign privilege tax.--Any county or municipality
19 which has on or before January 1, 1996, assessed, levied or
20 collected an annual sign tax or annual sign privilege tax or
21 provided for the levying, assessment or collection of such tax
22 may continue to levy, assess and collect such tax on such
23 subjects upon which the tax was imposed by the county or
24 municipality at a rate not to exceed the rate imposed by the
25 county or municipality as of January 1, 1997. A county or
26 municipality which does not assess, levy or collect an annual
27 sign tax or annual sign privilege tax as of January 1, 1996, may
28 not assess, levy or collect such tax. This subsection shall
29 apply regardless of whether there is an election to participate
30 under section 303(a).
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1 (f) Cities of the first class.--Nothing in this act shall,
2 either explicitly or implicitly, permit a city of the first
3 class to levy, assess or collect, and, for purposes of the act
4 of August 5, 1932 (Sp.Sess., P.L.45, No.45), referred to as the
5 Sterling Act, and of the act of August 9, 1963 (P.L.640,
6 No.338), entitled "An act empowering cities of the first class,
7 coterminous with school districts of the first class, to
8 authorize the boards of public education of such school
9 districts to impose certain additional taxes for school district
10 purposes, and providing for the levy, assessment and collection
11 of such taxes," no city of the first class shall have the
12 authority to levy, assess or collect a tax on banks, bank and
13 trust companies, private banks, savings banks or trust companies
14 as defined in the Banking Code of 1965 or of any other
15 institution or entity subject to the supervision of the
16 Department of Banking under the Department of Banking Code or of
17 any national bank or any similar institution or entity
18 established pursuant to Federal law or the law of any state,
19 except taxes on real estate or transfers thereof or taxes
20 otherwise expressly authorized by an act of the General
21 Assembly.
22 (g) Parking taxes.--Any city of the second class which has
23 elected to participate under section 303(a) and has on or before
24 January 1, 1997, levied, assessed or collected or provided for
25 the levying, assessment or collection of a parking tax may
26 continue to levy, assess and collect such tax.
27 (h) Effect of unconstitutionality.--Notwithstanding any
28 other provisions of the act of May 21, 1943 (P.L.349, No.162),
29 entitled "An act requiring political subdivisions to refund
30 certain taxes, license fees, penalties, fines or moneys paid
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1 thereto, and providing procedure for obtaining such refunds," to
2 the contrary, if the tax imposed under the act of June 17, 1913
3 (P.L.507, No.335), referred to as the Intangible Personal
4 Property Tax Law, is held by final judgment of a court of
5 competent jurisdiction to be unconstitutional, a county of the
6 second, second class A or third through eighth class and a city
7 of the first class coterminous with a county of the first class
8 imposing that tax shall refund the moneys collected and due only
9 in the year in which the declaration of unconstitutionality was
10 made. Any taxpayer owing the tax from prior years shall continue
11 to be held liable for the tax.
12 Section 104. Preemption.
13 No act of the General Assembly will vacate or preempt any
14 ordinance adopted under this act providing for the imposition of
15 a tax by a county or municipality unless the act of the General
16 Assembly expressly vacates or preempts the authority to adopt
17 the ordinance.
18 Section 105. Home rule counties and municipalities.
19 (a) Participation under act.--Except for the case when a
20 governing body of a home rule county elects to adopt the tax
21 authorized under section 312, the governing body of a home rule
22 county or home rule municipality which desires to participate
23 under the provisions of this act shall not be subject to the
24 public referendum requirements of section 303(b). The governing
25 body of a home rule county which desires to adopt the tax
26 authorized under section 312 shall be subject to the public
27 referendum requirements of section 303(b).
28 (b) Public referendum requirements for increasing property
29 taxes previously reduced.--Any governing body of a home rule
30 county or home rule municipality which elects to participate
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1 under this act is not subject to the provisions of section 304.
2 (c) Ending participation under act.--The governing body of a
3 home rule county or home rule municipality which desires to end
4 participation under the provisions of this act shall not be
5 subject to the public referendum requirements of section 303.
6 (d) Rates of taxation.--A home rule county shall not have
7 the right or authority to fix the rate of taxation for the
8 subjects of taxation authorized under Chapter 3 in excess of the
9 rates fixed in Chapter 3.
10 (e) Disposition of revenues.--Home rule counties which elect
11 to participate under the provisions of this act shall be subject
12 to all the provisions of sections 701(a) and 702(b)(1),
13 including the provision that any increase in revenues between
14 the transition year and the prior year's budgeted revenues not
15 exceed 5% or the annual increase in the Statewide average weekly
16 wage, whichever is less.
17 Section 106. Certain rates of taxation limited.
18 If a municipality and school district both impose an earned
19 income tax on the same individual under the Local Tax Enabling
20 Act and the municipality and school district are limited to, or
21 have agreed upon, a division of the tax rate in accordance with
22 section 8 of the Local Tax Enabling Act, then the municipality
23 and school district which continue to levy the income tax under
24 the Local Tax Enabling Act shall remain subject to that
25 limitation or agreement in the event that the municipality opts
26 to impose a tax under section 322 or 331.
27 CHAPTER 3
28 SUBJECTS OF TAXATION
29 SUBCHAPTER A
30 TAX AUTHORIZATION
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1 Section 301. General tax authorization.
2 (a) General rule.--Subject to sections 303 and 304 and
3 except as provided in subsection (b), each county or
4 municipality shall have the power and may by ordinance levy,
5 assess and collect or provide for the levying, assessment and
6 collection of such taxes on the subjects specified in this
7 chapter for general revenue purposes as it shall determine on
8 any or all of the subjects of taxation set forth in this act
9 within the geographical limits of the county or municipality.
10 (b) Exclusions.--No county or municipality which levies a
11 tax authorized by this act shall have any power or authority to
12 levy, assess or collect:
13 (1) A tax based upon a flat rate or on a millage rate on
14 an assessed valuation of a particular trade, occupation or
15 profession, commonly known as an occupation tax.
16 (2) A tax at a set or flat rate upon persons employed
17 within the taxing district, commonly known as an occupational
18 privilege tax.
19 (3) A per capita, poll, residence or similar head tax.
20 (4) The earned income and net profits tax levied under
21 the Local Tax Enabling Act.
22 (5) Any other tax authorized or permitted under the
23 Local Tax Enabling Act except a mercantile or business
24 privilege tax on gross receipts, as modified by paragraph
25 (9).
26 (6) An earned income tax under the act of August 24,
27 1961 (P.L.1135, No.508), referred to as the First Class A
28 School District Earned Income Tax Act, or under the
29 additional authority in section 652.1(a)(2) of the act of
30 March 10, 1949 (P.L.30, No.14), known as the Public School
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1 Code of 1949.
2 (7) Any tax under section 652.1(a)(4) of the Public
3 School Code of 1949 except as it pertains to real estate
4 transfer taxes.
5 (8) The intangible personal property tax under the act
6 of June 17, 1913 (P.L.507, No.335), referred to as the
7 Intangible Personal Property Tax Law.
8 (9) Any mercantile or business privilege tax on gross
9 receipts, as limited by section 533 of the act of December
10 13, 1988 (P.L.1121, No.145), known as the Local Tax Reform
11 Act, after one year from the date of the election to
12 participate under this act pursuant to section 303.
13 (10) Any other tax authorized under the Local Tax
14 Enabling Act as limited by the provisions of this act.
15 (c) Delinquent taxes.--The provisions of subsection (b)
16 shall not apply to collection of delinquent taxes.
17 Section 302. Continuity of tax.
18 Every tax levied under the provisions of this act shall
19 continue in force on a calendar or fiscal year basis, as the
20 case may be, without annual reenactment unless the rate of tax
21 is increased or the tax is subsequently repealed.
22 Section 303. Election to participate under act.
23 (a) General rule.--
24 (1) Any governing body which desires to participate
25 under the provisions of this act shall make that
26 determination by using the procedures set forth in subsection
27 (b).
28 (2) Any governing body after making an election to
29 participate under this act may, after a period of at least
30 three full calendar years or fiscal years of participation,
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1 elect under the provisions of subsection (b) to levy, assess
2 and collect the taxes prohibited by section 301(b) to the
3 extent otherwise provided by law. If the electorate approves
4 such referendum, the governing body shall lose the authority
5 to continue to levy any tax authorized under this act.
6 (3) If a municipality or county does not act as
7 authorized under subsection (b) within five years following
8 the effective date of this act, a referendum on the question
9 of whether a tax study commission shall be appointed in
10 accordance with the terms and conditions of this act may be
11 initiated by electors of the municipality or county. A
12 petition containing a proposal for referendum on the question
13 of appointing a tax study commission, signed by electors
14 comprising 2% of the number of electors voting for the office
15 of Governor in the last gubernatorial general election in the
16 municipality or county, may be filed with the election
17 officials at least 90 days prior to the next general
18 election.
19 (i) The name and address of the person filing the
20 petition shall be clearly stated on the petition.
21 (ii) The election officials shall, within ten days
22 after filing, review the initiative petition as to the
23 number and qualifications of signers. If the petition
24 appears to be defective, the election officials shall
25 immediately notify the person filing the petition of the
26 defect.
27 (iii) The initiative petition as submitted to the
28 election officials along with the list of signatories
29 shall be open to public inspection in the office of the
30 election officials.
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1 (iv) When the election officials find that the
2 petition as submitted is in proper order, they shall send
3 copies of the initiative petition without signatures
4 thereon to the governing body of the municipality or
5 county involved.
6 (v) The procedure for the referendum shall be
7 governed by the act of June 3, 1937 (P.L.1333, No.320),
8 known as the Pennsylvania Election Code.
9 (vi) When the election officials find the initiative
10 petition as submitted by the electors meets the
11 requirements of this act, they shall place the proposal
12 on the ballot in a manner fairly representing the content
13 of the initiative petition for decision by referendum at
14 the proper election.
15 (vii) The election officials shall certify the date
16 for the referendum and shall so notify the governing body
17 of the municipality or county at least 30 days prior to
18 such date.
19 (viii) At least 30 days' notice of the referendum
20 shall be given by proclamation of the governing body of
21 the municipality or county. A copy of the proclamation
22 shall be posted at each polling place on the day of the
23 election and shall be published once in at least one
24 newspaper of general circulation in the municipality or
25 county during the 30-day period prior to the election.
26 (ix) Approval of a referendum shall be by a majority
27 vote of those voting in each municipality or county
28 involved.
29 (x) The election officials shall certify the results
30 of the referendum to the governing body.
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1 (b) Public referendum requirements to participate or end
2 participation under act.--Subject to the notice and public
3 hearing requirements of section 316(a), 325(a) or 334, whichever
4 is applicable, a governing body may elect to participate or, in
5 accordance with subsection (a)(2), may elect to end
6 participation under this act by obtaining the approval of the
7 electorate of the affected county or municipality in a public
8 referendum at only the November election preceding the calendar
9 year or fiscal year when the taxes will be initially imposed.
10 The referendum question must state the initial rate of the
11 proposed tax, the reason for the tax and the amount of proposed
12 revenue growth, if any, in the fiscal year of transition to the
13 tax system authorized under this act, expressed as a percent
14 increase over the prior year's budgeted revenue. Any increase in
15 revenues between the transition year and the prior year's
16 budgeted revenue shall not exceed 5% or the annual percent
17 change in the Statewide average weekly wage, whichever is less.
18 The governing body must frame the question in clear language
19 that is readily understandable by the layperson. For the purpose
20 of illustration, a referendum question could be framed as
21 follows:
22 Do you favor the imposition of an X% (name of tax) to be
23 used to replace certain existing local taxes, make
24 reductions in real property taxes and provide for a one-
25 time spending increase of X% over the preceding fiscal
26 year?
27 A nonlegal interpretative statement must accompany the question
28 in accordance with section 201.1 of the act of June 3, 1937
29 (P.L.1333, No.320), known as the Pennsylvania Election Code,
30 that includes the following: the initial rate of the tax or
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1 taxes to be imposed and the maximum allowable rate of the tax or
2 taxes imposed under this act; the estimated revenues to be
3 derived from the initial rate of the tax or taxes imposed under
4 this act; the amount of proposed revenue growth, if any, in the
5 fiscal year of transition to the tax system authorized under
6 this act; the estimated tax savings from the reduction in real
7 property taxes and the elimination of certain existing taxes
8 under this act; the identification of the existing taxes to be
9 eliminated under this act; the method or methods to be used to
10 reduce real property taxes; the class or classes of real
11 property for which real property taxes would be reduced; and the
12 estimated amount of real property tax reduction by class,
13 expressed as an average percent reduction by class. Any
14 governing body which uses the procedures under this section
15 shall not be subject to the provisions of section 304 for any
16 future increases in income tax rates. Any future real property
17 tax rate increases are subject to the provisions of section 304.
18 If there is a failed attempt to participate under the provisions
19 of this act pursuant to section 303, section 303 or 304 shall
20 not require the approval of the electorate as a prerequisite to
21 the increase in the rate of any tax which the governing body of
22 the affected county or municipality is authorized to levy and
23 increase pursuant to any other act.
24 Section 304. Public referendum requirements for increasing
25 property taxes previously reduced.
26 (a) General rule.--Except as provided in subsection (c), a
27 governing body of a municipality or county which elects to
28 participate under this act pursuant to section 303(a) may not
29 increase the rate of real property taxes that were reduced using
30 revenue derived from an income and/or sales tax imposed under
19990S0129B0123 - 20 -
1 this act or any other act by an amount exceeding the annual
2 percent change in the Statewide average weekly wage in the
3 preceding year without first obtaining approval of the
4 electorate of the affected county or municipality in a public
5 referendum at the November election immediately preceding the
6 calendar year of the proposed tax increase for entities
7 operating on a calendar year fiscal basis and at the primary
8 election for the calendar year of the proposed tax increase for
9 entities operating on a July to June fiscal basis.
10 (b) Disapproval.--Whenever the electorate fails to approve
11 the proposed referendum question as required under subsection
12 (a) increasing the rates of tax, the governing body shall be
13 limited to the tax rate in effect prior to the referendum.
14 (c) Referendum exceptions.--The provisions of subsection (a)
15 shall not apply to any necessary tax increases in the following
16 cases:
17 (1) To respond to or recover from an emergency or
18 disaster declared pursuant to 35 Pa.C.S. Pt. V (relating to
19 emergency management services), for the duration of the
20 emergency or disaster or for the costs of the recovery from
21 the emergency or disaster.
22 (2) To implement a court order or an administrative
23 decision of a Federal or State agency. In instances where the
24 tax increase is necessary to respond to a court order or an
25 administrative decision of a Federal or State agency
26 requiring a temporary increase in local expenditures, the
27 rate increase shall be rescinded following fulfillment of the
28 court order or administrative decision.
29 (3) To pay interest and principal on any indebtedness
30 incurred under 53 Pa.C.S. Pt. VII Subpt. B (relating to
19990S0129B0123 - 21 -
1 indebtedness and borrowing). However, in no case may a taxing
2 jurisdiction incur additional debt under this paragraph,
3 except for the refinancing of existing debt, including the
4 payment of costs and expenses related to such refinancing and
5 the establishment or funding of appropriate debt service
6 reserves.
7 (4) Taxes levied under section 607(f) of the act of
8 December 18, 1984 (P.L.1005, No.205), known as the Municipal
9 Pension Plan Funding Standard and Recovery Act, or levied to
10 pay increases in pension fund requirements which are in
11 excess of the annual average increase over the immediately
12 preceding five fiscal years.
13 (5) To increase revenues when actual and projected local
14 tax revenues, including any share of a county sales and use
15 tax, decline from the immediately preceding year but only to
16 the extent of the revenue decline.
17 (6) To respond to conditions that pose a threat of
18 immediate harm or injury to the students, staff or residents
19 of the county or municipality.
20 (7) Special purpose tax levies approved by the
21 electorate.
22 (8) To respond to a Federal or State statute, regulation
23 or order adding to or significantly altering responsibilities
24 and duties or requiring expenditure of county or local funds
25 to the extent not funded by the Federal or State Government.
26 This provision shall apply only to a Federal or State
27 statute, regulation or order taking effect after the
28 effective date of this act.
29 (d) Court action.--Prior to any tax increase under
30 subsection (c)(1), (4), (5), (6) or (8), approval is required by
19990S0129B0123 - 22 -
1 the court of common pleas in the judicial district in which the
2 governing body is located. The following shall apply to any
3 proceedings instituted under this subsection:
4 (1) The governing body must prove by a preponderance of
5 evidence the necessity for the tax increase.
6 (2) The court may retain continuing jurisdiction in
7 these cases and may, on its own motion or on petition of an
8 interested party, revoke approval for a tax increase.
9 (e) Distressed municipality or county.--This section shall
10 not be construed to prohibit any municipality or county declared
11 distressed under the act of July 10, 1987 (P.L.246, No.47),
12 known as the Municipalities Financial Recovery Act, from
13 petitioning the court of common pleas for a tax increase in
14 accordance with section 123(c) of the Municipalities Financial
15 Recovery Act.
16 (f) Standing.--Any taxpayer or business shall have standing
17 as a party to a proceeding under this section as long as the
18 taxpayer or business resides within or pays real property taxes
19 to the taxing jurisdiction of the governing body instituting the
20 action.
21 Section 305. Local tax study commission.
22 (a) First-year implementation.--Before any municipality or
23 county seeks referendum approval for the levy, assessment or
24 collection of any tax under the authority of this act, the
25 governing body may appoint a local tax study commission in
26 accordance with the following provisions:
27 (1) Membership.--The local tax study commission shall
28 consist of members appointed by the governing body. One
29 member of the local tax study commission may be a member of
30 the governing body, as deemed appropriate by the governing
19990S0129B0123 - 23 -
1 body. No member of the local tax study commission shall be a
2 relative by blood or marriage of an official or employee of
3 the municipality or county. All members shall be residents of
4 the municipality or county. In municipalities with a
5 population of less than 5,000, there shall be a minimum of
6 three members. In municipalities with a population of 5,000
7 or more, and in counties, the local tax study commission
8 shall consist of five, seven or nine members. Representatives
9 on a local tax study commission must reasonably reflect the
10 socioeconomic, age and occupational diversity of the
11 municipality or county.
12 (2) Staff and expenses.--The governing body shall
13 provide necessary and reasonable staff to support the local
14 tax study commission and shall reimburse the members of the
15 local tax study commission for necessary and reasonable
16 expenses in the discharge of their duties.
17 (3) Contents of study.--The local tax study commission
18 shall study the existing taxes levied, assessed and collected
19 by the municipality or county and the effect of any county or
20 municipal taxes imposed concurrently with a school district
21 and shall determine if and how the tax policies of the
22 municipality or county could be strengthened or made more
23 equitable by adopting for levy, assessment and collection one
24 or a combination of any of the following taxes: local
25 personal income tax, earned income and net profits tax, real
26 estate tax or realty transfer tax at such levels and in such
27 combinations on permissible subjects of taxation as do not
28 exceed the limitations in this act. This study shall include,
29 but not be limited to, consideration of all of the following:
30 (i) Historic rate and revenue provided by taxes
19990S0129B0123 - 24 -
1 currently levied, assessed and collected by the
2 municipality or county.
3 (ii) The percentage of total revenues provided by
4 taxes currently levied, assessed and collected.
5 (iii) The age, income, employment and property use
6 characteristics of the existing tax base.
7 (iv) The projected revenues of any taxes currently
8 levied, assessed and collected.
9 (v) The projected revenues of any taxes referred to
10 in this paragraph not currently levied, assessed and
11 collected by the municipality or county.
12 (4) Recommendation.--Within 60 days of its appointment,
13 the local tax study commission shall make a nonbinding
14 recommendation to the governing body of the appropriate tax
15 or combination of taxes, identified in paragraph (3), to be
16 levied, assessed and collected commencing the next fiscal
17 year. Except as provided for in paragraph (5), if the
18 governing body appoints a commission, no tax may be levied,
19 assessed or collected for the next fiscal year until receipt
20 of the recommendation of the local tax study commission. No
21 later than 30 days prior to the commencement of the next
22 fiscal year, the governing body shall accept or reject the
23 recommendation of the local tax study commission or adopt any
24 other appropriate tax or combination of taxes for the
25 municipality or county commencing the next fiscal year as
26 provided by law.
27 (5) Failure to issue recommendation.--If the local tax
28 study commission fails to make a nonbinding recommendation
29 within 60 days of its appointment, the governing body shall
30 discharge the appointed local tax study commission and
19990S0129B0123 - 25 -
1 appoint itself as the local tax study commission. No later
2 than 30 days prior to the commencement of the next fiscal
3 year, the governing body shall adopt the appropriate tax or
4 combination of taxes for the municipality or county
5 commencing the next fiscal year as provided by law.
6 (6) Public distribution of report.--The local tax study
7 commission shall publish or cause to be published, within 30
8 days of making its recommendation, a final report of its
9 activities and recommendations and shall deliver the final
10 report to the secretary of the governing body who shall
11 supply copies to any interested persons upon request.
12 (7) Receipts.--Receipts are required for all
13 reimbursable expenses under paragraph (2).
14 (8) Materials.--All the records, receipts, tapes,
15 minutes of meetings and written discussions of the local tax
16 study commission shall, upon its discharge, be turned over to
17 the secretary or chief clerk of the municipality or county
18 for permanent safekeeping. The secretary or chief clerk shall
19 make such materials available for public inspection at any
20 time during regular business hours.
21 (9) Discharge.--The local tax study commission shall be
22 discharged upon the filing of its final report.
23 (b) Three-year review.--Any municipality or county that
24 levies, assesses and collects or provides for the levy,
25 assessment or collection of any tax, after having received the
26 recommendations of a local tax study commission, shall continue
27 to levy, assess and collect the same tax or combination of taxes
28 for the next three fiscal years. However, nothing in this act
29 shall preclude the governing body from changing or altering the
30 rates of any such tax or combination of taxes if it deems
19990S0129B0123 - 26 -
1 necessary. Before the third fiscal year following the
2 municipality or county action on the recommendations of a local
3 tax study commission, and every third fiscal year thereafter,
4 the governing body may appoint a local tax study commission in
5 the manner provided in subsection (a). The local tax study
6 commission appointed under this subsection shall be charged with
7 all of the same powers and duties provided for the local tax
8 study commission under subsection (a).
9 SUBCHAPTER B
10 COUNTY SALES AND USE TAX
11 Section 311. Construction.
12 The tax imposed by the governing body of a county under this
13 subchapter shall be in addition to any tax imposed by the
14 Commonwealth under Article II of the Tax Reform Code. Except for
15 the differing situs provisions under section 313, the provisions
16 of Article II of the Tax Reform Code shall apply to the tax.
17 Section 312. Imposition.
18 (a) Sales.--The governing body of a county, except for a
19 county of the second class, may levy and assess upon each
20 separate sale at retail of tangible personal property or
21 services, as defined in Article II of the Tax Reform Code,
22 within the boundaries of the county, a tax on the purchase
23 price. The tax shall be collected by the vendor from the
24 purchaser and shall be paid over to the Commonwealth as provided
25 in this subchapter. The sales tax shall not be paid to the
26 Commonwealth by any person who has paid the tax imposed under
27 Chapter 5 of the act of June 5, 1991 (P.L.9, No.6), known as the
28 Pennsylvania Intergovernmental Cooperation Authority Act for
29 Cities of the First Class, or subdivision (e) of Article XXXI-B
30 of the act of July 28, 1953 (P.L.723, No.230), known as the
19990S0129B0123 - 27 -
1 Second Class County Code, equal to or greater than the tax
2 imposed under this subsection.
3 (b) Use.--In any county, except for a county of the second
4 class, within which the tax authorized in subsection (a) is
5 imposed, there shall be levied, assessed and collected upon the
6 use within the county of tangible personal property purchased at
7 retail and on services purchased at retail, as defined in
8 Article II of the Tax Reform Code, a tax on the purchase price.
9 The tax shall be paid over to the Commonwealth by the person who
10 makes the use. The use tax imposed under this subchapter shall
11 not be paid over to the Commonwealth by any person who has paid
12 the tax imposed under:
13 (1) Subsection (a).
14 (2) This subsection to the vendor with respect to the
15 use.
16 (3) Chapter 5 of the Pennsylvania Intergovernmental
17 Cooperation Authority Act for Cities of the First Class,
18 equal to or greater than the tax imposed under either
19 subsection (a) or this subsection.
20 (4) Subdivision (e) of Article XXXI-B of the Second
21 Class County Code equal to or greater than the tax imposed
22 under either subsection (a) or this subsection.
23 (c) Occupancy.--In any county within which a tax authorized
24 by subsection (a) is imposed, there shall be levied, assessed
25 and collected an excise tax on the rent upon every occupancy of
26 a room or rooms in a hotel in the county. The tax shall be
27 collected by the operator or owner from the occupant and paid
28 over to the Commonwealth.
29 (d) Rate and uniformity.--
30 (1) The tax authorized by subsections (a), (b) and (c)
19990S0129B0123 - 28 -
1 shall be imposed at a rate of 1%.
2 (2) The tax imposed by subsections (a), (b) and (c)
3 shall be uniform.
4 (e) Computation.--The tax imposed under this section shall
5 be computed in the manner set forth in section 503(e)(2) of the
6 Pennsylvania Intergovernmental Cooperation Authority Act for
7 Cities of the First Class.
8 (f) Exception.--The optional provisions of subsections (a),
9 (b) and (c) shall be subject to the provisions of section 320.1.
10 Section 313. Situs.
11 (a) General rule.--Except as provided in subsections (b) and
12 (c), the situs of sales at retail or uses, including leases, of
13 motor vehicles, aircraft, motorcraft and utility services shall
14 be determined in the manner specified by section 504 of the act
15 of June 5, 1991 (P.L.9, No.6), known as the Pennsylvania
16 Intergovernmental Cooperation Authority Act for Cities of the
17 First Class, as well as the Tax Reform Code.
18 (b) Premium cable services.--The sale or use of premium
19 cable service shall be deemed to occur at the service address in
20 the county which is the address where the customer cable
21 connection is located. This subsection shall determine the situs
22 of premium cable service for the purpose of all local sales
23 taxes, including those imposed pursuant to Chapter 5 of the
24 Pennsylvania Intergovernmental Cooperation Authority Act for
25 Cities of the First Class and pursuant to subdivision (e) of
26 Article XXXI-B of the act of July 28, 1953 (P.L.723, No.230),
27 known as the Second Class County Code.
28 (c) Telecommunications service.--The situs of
29 telecommunications service under this act shall be determined in
30 accordance with regulations adopted by the department, which
19990S0129B0123 - 29 -
1 shall be uniform among all counties, and shall be consistent
2 with regulations promulgated under Subdivision (e) of Article
3 XXXI-B of the Second Class County Code, Article II of the Tax
4 Reform Code and Chapter 5 of the Pennsylvania Intergovernmental
5 Cooperation Authority Act for Cities of the First Class.
6 Section 314. Licenses.
7 A license for the collection of the tax imposed by this
8 subchapter shall be issued in the same manner as is provided for
9 in section 505 of the act of June 5, 1991 (P.L.9, No.6), known
10 as the Pennsylvania Intergovernmental Cooperation Authority Act
11 for Cities of the First Class. Licensees shall be entitled to
12 the same discount as provided in section 227 of the Tax Reform
13 Code.
14 Section 315. Rules and regulations; collection costs.
15 (a) Regulations.--Rules and regulations shall be applicable
16 to the taxes imposed under section 312 in the same manner as is
17 provided for in section 506(1) and (2) of the act of June 5,
18 1991 (P.L.9, No.6), known as the Pennsylvania Intergovernmental
19 Cooperation Authority Act for Cities of the First Class.
20 (b) Administrative costs.--The department, to cover its
21 costs of administration under this subchapter, shall be entitled
22 to retain a sum equal to the costs of administration. When the
23 annual operating budget for the department is submitted to the
24 General Assembly, the department shall also submit to the
25 chairman and minority chairman of the Appropriations Committee
26 of the Senate and to the chairman and minority chairman of the
27 Appropriations Committee of the House of Representatives a
28 report of the actual sums retained for costs of collection in
29 the preceding fiscal year, together with all supporting details.
30 Section 316. Procedure and administration.
19990S0129B0123 - 30 -
1 (a) Ordinance.--Any county desiring to impose the tax
2 authorized by section 312 shall give at least 60 days' written
3 notice to every municipality located in the county of its intent
4 to impose the tax and shall adopt an ordinance after the
5 expiration of 60 days after the date of such notice. The notice
6 and ordinance shall state the tax rate and refer to this
7 subchapter. The ordinance shall authorize the imposition of all
8 taxes provided for in section 312. Prior to adopting an
9 ordinance imposing the tax authorized by section 312, the
10 governing body of the county shall give public notice of its
11 intent to adopt the ordinance in the manner provided by section
12 4 of the Local Tax Enabling Act and shall conduct at least one
13 public hearing regarding the proposed adoption of the ordinance.
14 (b) Notification to department.--A certified copy of the
15 county ordinance shall be delivered to the department by June 1
16 of the year prior to the effective date thereof. The county
17 ordinance shall become effective on the January 1 following at
18 least seven months after the date of enactment of the county
19 ordinance.
20 (c) Delivery of repeal ordinance.--A certified copy of a
21 repeal ordinance shall be delivered to the department at least
22 120 days prior to the effective date of the repeal.
23 Section 317. County sales and use tax funds.
24 There is hereby created for each county levying the tax under
25 section 312 the (proper name) County Sales and Use Tax Fund. The
26 State Treasurer shall be custodian of the funds which shall be
27 subject to the provisions of law applicable to funds listed in
28 section 302 of the act of April 9, 1929 (P.L.343, No.176), known
29 as The Fiscal Code. Taxes imposed under section 312 shall be
30 received by the department and paid to the State Treasurer and,
19990S0129B0123 - 31 -
1 along with interest and penalties, less any collection costs
2 allowed under this subchapter and any refunds and credits paid,
3 shall be credited to the funds not less frequently than every
4 two weeks. During any period prior to the credit of moneys to
5 the funds, interest earned on moneys received by the department
6 and paid to the State Treasurer under this subchapter shall be
7 deposited into the funds. All moneys in the funds, including,
8 but not limited to, moneys credited to the funds under this
9 section, prior year encumbrances and the interest earned
10 thereon, shall not lapse or be transferred to any other fund,
11 but shall remain in the funds. Pending their disbursement,
12 moneys received on behalf of or deposited into the funds shall
13 be invested or reinvested as are other moneys in the custody of
14 the State Treasurer in the manner provided by law. All earnings
15 received from the investment or reinvestment of the moneys shall
16 be credited to the respective funds. The Auditor General shall
17 periodically audit the records of the department relative to its
18 duties under this section and shall furnish the results of such
19 audit to any county levying the sales and use tax under section
20 312 and to any municipality qualified under section 320.
21 Section 318. Disbursements.
22 (a) General rule.--On or before the tenth day of every
23 month, the State Treasurer shall make the disbursements on
24 behalf of the county imposing the tax out of the moneys which
25 are, as of the last day of the previous month, contained in the
26 respective county sales and use tax fund.
27 (b) Disbursement to counties.--The State Treasurer shall
28 disburse to a county imposing the tax authorized under section
29 312 an amount of money equal to 50% of the tax collected in that
30 county and remitted to the department and deposited in the
19990S0129B0123 - 32 -
1 respective county sales and use tax fund. The county shall
2 deposit the revenue from the respective county sales and use tax
3 fund into the county general fund for disposition as provided
4 under section 701(a).
5 (c) Disbursement to municipalities.--The State Treasurer
6 shall, at the same time, disburse to the municipalities 50% of
7 the tax collected in their respective counties as provided in
8 section 320. Each municipality's portion shall be deposited in
9 the municipal general fund for disposition as provided in
10 section 701(b).
11 Section 319. Adoption of municipal resolutions.
12 (a) General rule.--No municipality shall be entitled to a
13 disbursement under section 318(c) unless one of the following
14 applies:
15 (1) Prior to enactment of the county ordinance, it
16 adopts a municipal resolution containing the statement:
17 We strongly urge the county to enact a county sales
18 and use tax and intend to accept disbursements of the
19 sales and use taxes collected.
20 Any municipality which does not enact a resolution and in
21 compliance with this paragraph shall not be entitled to and
22 shall not receive any distribution from funds collected
23 during the first 24 months immediately following the initial
24 date of imposition of such tax.
25 (2) Prior to October 1 of any year after the enactment
26 of the county resolution, it adopts a municipal resolution
27 containing the statement:
28 We support the enactment by the county of the county
29 sales and use tax and strongly urge its continuation
30 and intend to accept disbursements of the sales and
19990S0129B0123 - 33 -
1 use taxes collected.
2 (b) Delivery.--A certified copy of the municipal resolution
3 shall be delivered to the county commissioners, the department
4 and the State Treasurer on or before the enactment of the county
5 resolution or October 15 of any year thereafter, as the case may
6 be.
7 Section 320. Qualified municipalities.
8 (a) General rule.--The State Treasurer shall distribute, on
9 a weighted formula basis, to each municipality that qualifies
10 under subsection (c) the appropriate percentage of revenues
11 received from the county sales and use tax.
12 (b) Retention by county.--If a municipality fails to meet
13 the requirements of subsection (c), its disbursement shall be
14 included in the disbursement to the county under section 318(b).
15 (c) Qualifications.--Municipalities qualified to receive
16 disbursements under this section are municipalities located
17 within the county which adopt in a timely fashion the resolution
18 or petition required under section 319.
19 Section 320.1. Municipal sales and use tax initiative.
20 (a) General rule.--Whenever the governing body of a county
21 elects to impose a tax on personal income under section
22 322(b)(1) or a local tax on earned income under section 331(b),
23 at least a majority of the municipalities within that county can
24 require the governing body of the county to also impose the
25 sales and use tax as provided in section 312.
26 (b) Procedure.--
27 (1) Whenever any municipality of a county determines
28 that the governing body of that county has elected not to
29 impose a tax under section 312, that municipality may place
30 before the governing bodies of all the municipalities of that
19990S0129B0123 - 34 -
1 county the following question:
2 Do you favor the imposition of a county sales and use
3 tax at the rate of 1% as provided in section 312 of
4 the Optional Local Tax Enabling Act?
5 (2) The affirmative votes of the governing bodies of
6 municipalities representing at least a majority of the
7 municipalities within the county shall be required to approve
8 the question.
9 (3) The governing body of the county, upon receipt of
10 certifications from the participating municipalities
11 indicating approval of the question shall, for the next
12 calendar year and thereafter, impose the tax authorized under
13 section 312, provided that approval of the electorate is
14 obtained pursuant to the provisions of section 303(b).
15 (4) Municipalities intending to receive proceeds from
16 the imposition of the tax shall also meet the requirements of
17 section 319, provided that municipalities voting
18 affirmatively under this subsection shall be deemed to meet
19 the requirements of section 319 for the year of initial
20 imposition.
21 SUBCHAPTER C
22 PERSONAL INCOME TAX
23 Section 321. Construction.
24 The tax imposed by the governing body of a county or
25 municipality under this subchapter shall be in addition to any
26 tax imposed by the Commonwealth under Article III of the Tax
27 Reform Code. Except for the differing provisions under sections
28 501, 502 and 503, the provisions of Article III of the Tax
29 Reform Code shall apply to the tax.
30 Section 322. Local personal income tax.
19990S0129B0123 - 35 -
1 (a) Municipalities.--A municipality shall have the power to
2 levy, assess and collect a local tax on the personal income of
3 resident individuals of the municipality up to a maximum rate of
4 1%, in increments of 0.25 of 1%.
5 (b) Counties.--
6 (1) Except as provided in paragraph (2), in lieu of
7 imposing the tax under section 312, each county shall have
8 the power and may levy, assess and collect a local tax on the
9 personal income of resident taxpayers of the county up to a
10 maximum rate of 0.5%, in increments of 0.25%. Any county
11 which imposes a tax under this paragraph may not impose a tax
12 under section 312.
13 (2) If the governing body of a county is required to
14 also impose a sales and use tax under section 320.1(a), in
15 addition to imposing the tax under section 312, the county
16 shall have the power and may levy, assess and collect a local
17 tax on the personal income of resident taxpayers of the
18 county up to a maximum rate of 0.5%, in increments of 0.25%.
19 Section 323. Collections.
20 Any county or municipality imposing a tax under section
21 322(a) or (b) shall designate the tax officer who is appointed
22 under section 10 of the Local Tax Enabling Act, or otherwise by
23 law, as the collector of the county or municipality local
24 personal income tax. In the performance of the tax collection
25 duties under this subchapter, the designated tax officer shall
26 have all the same powers, rights, responsibilities and duties
27 for the collection of the taxes which may be imposed under the
28 Local Tax Enabling Act or as otherwise provided by law.
29 Section 324. Rules and regulations.
30 Taxes imposed under section 322 will be subject to the rules
19990S0129B0123 - 36 -
1 and regulations adopted by the department pursuant to Article
2 III of the Tax Reform Code.
3 Section 325. Procedure and administration.
4 The governing body of the municipality or county, in order to
5 impose the tax authorized by section 322, shall adopt an
6 ordinance which shall refer to this subchapter. Prior to
7 adopting an ordinance imposing the tax authorized by section
8 322, the governing body shall give public notice of its intent
9 to adopt the ordinance in the manner provided by section 4 of
10 the Local Tax Enabling Act and shall conduct at least one public
11 hearing regarding the proposed adoption of the ordinance.
12 SUBCHAPTER D
13 EARNED INCOME AND NET PROFITS TAX
14 Section 331. Earned income and net profits tax.
15 (a) Municipalities.--In lieu of imposing the tax under
16 section 322, a municipality shall have the power to levy, assess
17 and collect a tax on the earned income and net profits of
18 resident individuals of the municipality up to a maximum rate of
19 1%, in increments of 0.25 of 1%. Any municipality which imposes
20 a tax under this subsection shall not impose any tax under
21 section 322.
22 (b) Counties.--
23 (1) Except as provided in paragraph (2), in lieu of
24 imposing the tax under section 312, each county shall have
25 the power and may levy, assess and collect a tax on the
26 earned income and net profits of resident taxpayers of the
27 county up to a maximum rate of 0.5% in increments of 0.25% of
28 1%. Any county which imposes a tax under this paragraph may
29 not impose a tax under section 322.
30 (2) If the governing body of a county is required to
19990S0129B0123 - 37 -
1 also impose a sales and use tax under section 320.1(a), in
2 addition to imposing a tax under section 312, the county
3 shall have the power and may levy, assess and collect a tax
4 on the earned income and net profits of resident taxpayers of
5 the county up to a maximum rate of 0.5% in increments of
6 0.25%.
7 Section 332. Collections.
8 Any municipality or county imposing a tax under section 331
9 shall designate the tax officer who is appointed under section
10 10 of the Local Tax Enabling Act, or otherwise by law, as the
11 collector of the earned income and net profits tax. In the
12 performance of the tax collection duties under this subchapter,
13 the designated tax officer shall have all the same powers,
14 rights, responsibilities and duties for the collection of the
15 taxes which may be imposed under the Local Tax Enabling Act or
16 as otherwise provided by law.
17 Section 333. Rules and regulations.
18 Taxes imposed under section 331 will be subject to the rules
19 and regulations pursuant to section 13 of the Local Tax Enabling
20 Act.
21 Section 334. Procedure and administration.
22 The governing body of the municipality or county, in order to
23 impose the tax authorized by section 331, shall adopt an
24 ordinance which shall refer to this subchapter. Prior to
25 adopting an ordinance imposing the tax authorized by section
26 331, the respective governing body shall give public notice of
27 its intent to adopt the ordinance in the manner provided by
28 section 4 of the Local Tax Enabling Act, and shall conduct at
29 least one public hearing regarding the proposed adoption of the
30 ordinance.
19990S0129B0123 - 38 -
1 SUBCHAPTER E
2 MUNICIPAL SERVICE TAX
3 Section 341. Municipal service tax.
4 (a) General rule.--Subject to the limitations established in
5 section 342, each municipality in which a taxpayer is employed
6 may levy, assess and collect a municipal service tax.
7 (b) Amount of tax.--A municipal service tax levied by a
8 municipality under an ordinance passed under the authority of
9 this act shall not exceed $30.
10 (c) Situs for tax.--Subject to the limitations in section
11 342, the situs of a municipal service tax shall be the place of
12 employment.
13 Section 342. Multiple employment locations.
14 (a) Priority of claim.--In the event a person is engaged in
15 more than one occupation or an occupation which requires the
16 person to work in more than one municipality during the calendar
17 year, the priority of claim to collect the municipal service tax
18 shall be in the following order:
19 (1) The municipality in which a person maintains his
20 principal office or is principally employed.
21 (2) The municipality in which the person resides and
22 works if the tax is levied by that municipality.
23 (3) The municipality nearest in miles to the person's
24 home in which the person is employed if the tax is levied by
25 that municipality.
26 (b) Place of employment.--The place of employment shall be
27 determined as of the day the taxpayer first becomes subject to
28 the tax during the calendar year.
29 (c) Liability.--No person shall be required to pay more than
30 $30 in any calendar year without regard to the number of
19990S0129B0123 - 39 -
1 municipalities within which the person may be employed.
2 Section 343. Collection procedures.
3 (a) Collector.--Any municipality which imposes a tax under
4 section 341 shall designate the tax officer who is appointed
5 under section 10 of the Local Tax Enabling Act, or otherwise by
6 law, as the collector of the municipality municipal services
7 tax. In the performance of the tax collection duties under this
8 subchapter, the designated tax officer shall have all the same
9 powers, rights, responsibilities and duties for the collection
10 of the taxes which may be imposed under the Local Tax Enabling
11 Act, or otherwise by law.
12 (b) Employer withholding.--Any municipality imposing a
13 municipal service tax shall have the power and may by ordinance
14 require employers to withhold the municipal service tax from the
15 compensation of employees. Any municipality which requires
16 employer withholding shall follow the procedures pursuant to
17 section 9 of the Local Tax Enabling Act.
18 SUBCHAPTERS F THROUGH I (RESERVED)
19 CHAPTER 5
20 CREDITS, EXEMPTIONS AND DEFERRALS
21 SUBCHAPTER A
22 CREDITS AND EXEMPTIONS
23 Section 501. Credits.
24 The provisions of section 14 of the Local Tax Enabling Act
25 shall be used to determine any credits under the provisions of
26 this act for any taxes imposed under section 322 on the earned
27 income portion of the personal income tax or under section 331.
28 Section 502. Cities of the first class.
29 Consistent with the policy of this act to provide for
30 fairness and equity in taxation, and to help create a tax
19990S0129B0123 - 40 -
1 climate that is favorable to economic activity, a credit against
2 personal income tax due to the Commonwealth under section 302 of
3 the Tax Reform Code shall be granted to all nonresidents of a
4 city of the first class who are subject to a tax imposed by a
5 city of the first class pursuant to the act of August 5, 1932
6 (Sp.Sess., P.L.45, No.45), referred to as the Sterling Act. The
7 credit shall equal 0.2756% of salaries, wages, commissions,
8 compensation or other income received for work done or services
9 performed within a city of the first class. The Secretary of
10 Revenue shall promulgate such regulations and forms as are
11 necessary to implement the provisions of this section.
12 Section 503. Low-income tax provisions.
13 The provisions of section 304 of the Tax Reform Code shall be
14 applied by any municipality or county which levies a tax under
15 section 322 or 331.
16 Section 504. Municipal service tax exemption.
17 Each municipality which levies a municipal service tax shall
18 have the power and may by ordinance exempt any person whose
19 total compensation is less than $7,500 from the municipal
20 service tax.
21 Section 505. Regulations.
22 Each county or municipality may adopt regulations for the
23 processing of claims under sections 501, 502, 503 and 504.
24 SUBCHAPTER B
25 REAL ESTATE TAX DEFERRAL
26 Section 511. Short title of subchapter.
27 This subchapter shall be known and may be cited as the Real
28 Estate Tax Deferment Program Act.
29 Section 512. Findings and legislative intent.
30 (a) Findings.--The General Assembly finds as follows:
19990S0129B0123 - 41 -
1 (1) Many tax jurisdictions are forced into an increasing
2 reliance on the real property tax.
3 (2) The high level of real property taxes in some taxing
4 jurisdictions makes it difficult for many individuals to keep
5 a home.
6 (3) The high level of real property taxes in many taxing
7 jurisdictions creates a tremendous hardship on many
8 taxpayers, especially those on fixed incomes.
9 (4) When counties conduct countywide reassessments, many
10 taxpayers experience substantial increases in their real
11 property taxes.
12 (b) Intent.--It is the intent of the General Assembly to
13 provide relief to residential property owners from tax increases
14 caused by changes in the millage rate, or assessment rates or
15 method or by a countywide reassessment. It is the further intent
16 of the General Assembly to create a program which will allow
17 counties and municipalities to defer the increased portion of
18 real property taxes when certain conditions are met.
19 Section 513. Definitions.
20 The following words and phrases when used in this subchapter
21 shall have the meanings given to them in this section unless the
22 context clearly indicates otherwise:
23 "Base payment." The amount of property tax paid by an
24 applicant in the base year.
25 "Base year." The tax year preceding the first tax year for
26 which a taxing authority implements the provisions of this
27 subchapter or the tax year immediately preceding an applicant's
28 entry into the tax deferral program.
29 "Claimant." A person who qualifies as a claimant under the
30 provisions of the act of March 11, 1971 (P.L.104, No.3), known
19990S0129B0123 - 42 -
1 as the Senior Citizens Rebate and Assistance Act, whether or not
2 a claim is filed under that act and whose household income does
3 not exceed the limit provided for in section 515.
4 "Homestead." Real property which qualifies as a homestead
5 under the provisions of the act of March 11, 1971 (P.L.104,
6 No.3), known as the Senior Citizens Rebate and Assistance Act,
7 except real property which is rented or leased to a claimant.
8 "Household income." All income as defined in the act of
9 March 11, 1971 (P.L.104, No.3), known as the Senior Citizens
10 Rebate and Assistance Act, received by the claimant and by the
11 claimant's spouse while residing in the homestead during the
12 calendar year for which a tax deferral is claimed.
13 "Increases in property taxes." An increase in the property
14 tax above the base payment, resulting from a millage increase, a
15 change in the assessment ratio or method, or any other reason.
16 "Taxing authority." A county, city, borough, town or
17 township that has elected to participate under this act in
18 accordance with section 303.
19 Section 514. Authority.
20 All taxing authorities shall have the power and authority to
21 grant annual tax deferrals in the manner provided in this
22 subchapter.
23 Section 515. Income eligibility.
24 A claimant shall be eligible for a tax deferral if the
25 claimant has a household income not exceeding the household
26 income eligibility limitations set forth in the act of March 11,
27 1971 (P.L.104, No.3), known as the Senior Citizens Rebate and
28 Assistance Act.
29 Section 516. Tax deferral.
30 (a) Amount.--An annual real estate tax deferral granted
19990S0129B0123 - 43 -
1 under this subchapter shall equal the increase in real property
2 taxes in excess of the claimant's base payment.
3 (b) Prohibition.--No tax deferrals shall be granted if the
4 total amount of deferred taxes, plus the total amount of all
5 other unsatisfied liens on the homestead of the claimant,
6 exceeds 85% of the market value of the homestead or if the
7 outstanding principal on any and all mortgages on the homestead
8 exceeds 70% of the market value of the homestead. Market value
9 shall equal assessed value divided by the common level ratio as
10 most recently determined by the State Tax Equalization Board for
11 the county in which the property is located.
12 Section 517. Application procedure.
13 (a) Initial application.--Any person eligible for a tax
14 deferral under this subchapter may apply annually to the taxing
15 authority. In the initial year of application, the following
16 information shall be provided in the manner required by the
17 taxing authority:
18 (1) A statement of request for the tax deferral.
19 (2) A certification that the applicant or the applicant
20 and his or her spouse jointly are the owners in fee simple
21 and residents of the property upon which the real property
22 taxes are imposed.
23 (3) A certification that the applicant's residence is
24 adequately insured under a homeowner's policy to the extent
25 of all outstanding liens.
26 (4) Receipts showing timely payment of the immediately
27 preceding year's nondeferred real property tax liability.
28 (5) Proof of income eligibility under section 515.
29 (b) Subsequent years.--After the initial entry into the
30 program, a claimant shall remain eligible for tax deferral in
19990S0129B0123 - 44 -
1 subsequent years so long as the claimant continues to meet the
2 eligibility requirements of this subchapter.
3 Section 518. Contents of application.
4 Any application for a tax deferral distributed to persons
5 shall contain the following:
6 (1) A statement that the tax deferral granted under this
7 subchapter is provided in exchange for a lien against the
8 homestead of the applicant.
9 (2) An explanation of the manner in which the deferred
10 taxes shall become due, payable and delinquent and include,
11 at a minimum, the consequences of noncompliance with the
12 provisions of this subchapter.
13 Section 519. Attachment and satisfaction of liens.
14 (a) Nature of lien.--All taxes deferred under this
15 subchapter shall constitute a prior lien on the homestead of the
16 claimant in favor of the taxing authority and shall attach as of
17 the date and in the same manner as other real estate tax liens.
18 The deferred taxes shall be collected as other real estate tax
19 liens, but the deferred taxes shall be due, payable and
20 delinquent only as provided in subsection (b), and no interest
21 shall be collected on the lien.
22 (b) Payment.--
23 (1) All or part of the deferred taxes may at any time be
24 paid to the taxing authority.
25 (2) In the event that the deferred taxes are not paid by
26 the claimant or the claimant's spouse during his or her
27 lifetime or during their continued ownership of the property,
28 the deferred taxes shall be paid either:
29 (i) prior to the conveyance of the property to any
30 third party; or
19990S0129B0123 - 45 -
1 (ii) prior to the passing of the legal or equitable
2 title, either by will or by statute, to the heirs of the
3 claimant or the claimant's spouse.
4 (3) The surviving spouse of a claimant shall not be
5 required to pay the deferred taxes by reason of his or her
6 acquisition of the property due to death of the claimant as
7 long as the surviving spouse maintains his or her residence
8 in the property. The surviving spouse may continue to
9 participate in the tax deferral program in subsequent years
10 provided he or she is eligible under the provisions of this
11 subchapter.
12 SUBCHAPTERS C THROUGH J (RESERVED)
13 CHAPTER 7
14 DISPOSITION OF TAX REVENUES
15 Section 701. Sales tax revenues.
16 (a) Counties.--In the fiscal year of implementation, each
17 county that imposes a sales and use tax under this act shall use
18 all revenues from the tax first to offset any lost revenue to
19 the county from the taxes prohibited under section 301(b) in an
20 amount equal to the revenue the county collected from the
21 prohibited taxes in the immediately preceding fiscal year;
22 second, to provide for an increase in budgeted revenues over the
23 preceding fiscal year in accordance with the amount specified in
24 the referendum question approved by the voters under section 303
25 and then to reduce the county real property tax by means of:
26 (1) The universal exemption or the homestead exemption.
27 (2) A reduction in the millage rate.
28 (3) Any combination of the options under paragraphs (1)
29 and (2), in accordance with section 704.
30 The department shall provide to each county that imposes a sales
19990S0129B0123 - 46 -
1 and use tax an estimate of the total dollar amount of revenue
2 that the county can expect to receive from the county's share of
3 the 1% county sales and use tax for the fiscal year of
4 implementation. The department may charge the county for the
5 actual costs of calculating the requested estimates. Guidelines
6 concerning the costs shall be published in the Pennsylvania
7 Bulletin. In the event the actual amount of sales and use tax
8 revenue received by a county is less than the estimate of sales
9 and use tax revenue provided by the department, the county may
10 increase its real property tax millage rate to the level
11 necessary to offset any shortfall resulting from an
12 overestimation of sales and use tax revenue, as certified by the
13 department, in the fiscal year of implementation. Such increase
14 shall not be subject to the provisions of section 304(a).
15 (b) Municipalities under Chapter 3.--
16 (1) All sales and use tax revenues received by any
17 municipality which has elected to participate under sections
18 303 and 319 shall be used to reduce the municipal real
19 property tax, respectively, by means of:
20 (i) The universal exemption or the homestead
21 exemption.
22 (ii) A reduction in the millage rate.
23 (iii) Any combination of the options under
24 subparagraphs (i) and (ii), in accordance with section
25 704.
26 (2) A municipality which has elected to proceed only
27 under section 319 shall use the sales and use tax revenues
28 received to reduce or eliminate the real property tax or any
29 taxes prohibited under section 301(b).
30 Section 702. Income tax and municipal service tax revenues.
19990S0129B0123 - 47 -
1 (a) Municipalities.--The disposition of revenue from an
2 income tax or municipal service tax or an increase in the rate
3 of an income tax or municipal service tax imposed by a
4 municipality under the authority of this act shall occur in the
5 following manner:
6 (1) For the fiscal year of implementation of a newly
7 imposed income tax or municipal service tax, all revenues
8 received by a municipality shall first be used to offset any
9 lost revenue to the municipality from the taxes prohibited
10 under section 301(b) in an amount equal to the revenue the
11 municipality collected from the prohibited taxes in the
12 immediately preceding fiscal year; second, to provide for an
13 increase in budgeted revenues over the preceding fiscal year
14 in accordance with the amount specified in the referendum
15 question approved by the voters under section 303 and then to
16 reduce the municipal real property tax by means of:
17 (i) The universal exemption or the homestead
18 exemption.
19 (ii) A reduction in the millage rate.
20 (iii) Any combination of the options under
21 subparagraphs (i) and (ii), in accordance with section
22 704.
23 (2) For the fiscal year of implementation of an increase
24 in the rate of income tax or increase in the rate of the
25 municipal service tax, all revenues received by a
26 municipality in excess of current revenue plus the percentage
27 increase in the Statewide average weekly wage or 5%,
28 whichever is less, shall be used to reduce the municipal real
29 property tax by means of:
30 (i) The universal exemption or the homestead
19990S0129B0123 - 48 -
1 exemption.
2 (ii) A reduction in the millage rate.
3 (iii) Any combination of the options under
4 subparagraphs (i) and (ii), in accordance with section
5 704.
6 (b) Counties.--The disposition of revenue from an income tax
7 or an increase in the rate of an income tax imposed by a county
8 under the authority of this act shall occur in the following
9 manner:
10 (1) For the fiscal year of implementation of a newly
11 imposed income tax, all revenues received by a county shall
12 first be used to offset any lost revenue to the county from
13 the taxes prohibited under section 301(b) in an amount equal
14 to the revenue the county collected from the prohibited taxes
15 in the immediately preceding fiscal year; second, to provide
16 for an increase in budgeted revenues over the preceding
17 fiscal year in accordance with the amount specified in the
18 referendum question approved by the voters under section 303
19 and then to reduce the county real property tax by means of:
20 (i) The universal exemption or the homestead
21 exemption.
22 (ii) A reduction in the millage rate.
23 (iii) Any combination of the options under
24 subparagraphs (i) and (ii), in accordance with section
25 704.
26 (2) For the fiscal year of implementation of an increase
27 in the rate of income tax, all revenues received by a county
28 in excess of current revenue plus the percentage increase in
29 the Statewide average weekly wage or 5%, whichever is less,
30 shall be used to reduce the county real property tax by means
19990S0129B0123 - 49 -
1 of:
2 (i) The universal exemption or the homestead
3 exemption.
4 (ii) A reduction in the millage rate.
5 (iii) Any combination of the options under
6 subparagraphs (i) and (ii), in accordance with section
7 704.
8 (c) Revenue estimates of department.--The department shall
9 provide to each taxing jurisdiction that imposes an income tax
10 under this act an estimate of the total dollar amount of revenue
11 that the taxing jurisdiction can expect to receive from an
12 income tax for the fiscal year of implementation. The department
13 may charge the taxing jurisdiction for the actual costs of
14 calculating the requested estimates. Guidelines concerning the
15 costs shall be published in the Pennsylvania Bulletin. In the
16 event the actual dollar amount of income tax revenue received by
17 a taxing jurisdiction is less than the estimate of income tax
18 revenue provided by the department, the taxing jurisdiction may
19 increase its real property tax millage rate to the level
20 necessary to offset any shortfall resulting from an
21 overestimation of income tax revenue, as certified by the
22 department, in the fiscal year of implementation. Such increase
23 shall not be subject to the provisions of section 304(a).
24 Section 703. Revenue limitation exceptions.
25 (a) Exceptions listed.--The limitations in sections 701 and
26 702 may be waived, but only to the degree necessary, in the
27 following cases:
28 (1) To respond to or recover from an emergency or
29 disaster declared pursuant to 35 Pa.C.S. Pt. V (relating to
30 emergency management services), for the duration of the
19990S0129B0123 - 50 -
1 emergency or duration of the disaster or for the costs of the
2 recovery from the emergency or disaster.
3 (2) To implement a court order or an administrative
4 decision of a Federal or State agency. In instances where the
5 tax increase is necessary to respond to a court order or an
6 administrative decision of a Federal or State agency
7 requiring a temporary increase in local expenditures, the
8 rate increase shall be rescinded following fulfillment of the
9 court order or administrative decision.
10 (3) To pay interest and principal on any indebtedness
11 incurred under 53 Pa.C.S. Pt. VII Subpt. B (relating to
12 indebtedness and borrowing). However, in no case may a taxing
13 jurisdiction incur additional debt under this paragraph,
14 except for the refinancing of existing debt, including the
15 payment of costs and expenses related to such refinancing and
16 the establishment or funding of appropriate debt service
17 reserves.
18 (4) Taxes levied under section 607(f) of the act of
19 December 18, 1984 (P.L.1005, No.205), known as the Municipal
20 Pension Plan Funding Standard and Recovery Act, or levied to
21 pay increases in pension fund requirements which are in
22 excess of the annual average increase over the immediately
23 preceding five fiscal years.
24 (5) To increase revenues when actual and projected local
25 tax revenues, including any share of a county sales and use
26 tax, decline from the immediately preceding year but only to
27 the extent of the revenue decline.
28 (6) To respond to conditions that pose a threat of
29 immediate harm or injury to the students, staff or residents
30 of the county or municipality.
19990S0129B0123 - 51 -
1 (7) Special purpose tax levies approved by the
2 electorate.
3 (8) To respond to a Federal or State statute, regulation
4 or order adding to or significantly altering responsibilities
5 and duties or requiring expenditure of county or local funds
6 to the extent not funded by the Federal or State Government.
7 This provision shall apply only to a Federal or State
8 statute, regulation or order taking effect after the
9 effective date of this act.
10 (b) Court action.--Prior to any waiver under subsection
11 (a)(1), (4), (5), (6) or (8), approval is required by the court
12 of common pleas in the judicial district in which the governing
13 body is located. The following shall apply to any proceedings
14 instituted under this subsection:
15 (1) The governing body must prove by a preponderance of
16 evidence the necessity for the waiver.
17 (2) The court may retain continuing jurisdiction in
18 these cases and may, on its own motion or on petition of an
19 interested party, revoke approval for the waiver.
20 (c) Distressed municipality or county.--This section shall
21 not be construed to prohibit any municipality or county declared
22 distressed under the act of July 10, 1987 (P.L.246, No.47),
23 known as the Municipalities Financial Recovery Act, from
24 petitioning the court of common pleas for a tax increase in
25 accordance with section 123(c) of the Municipalities Financial
26 Recovery Act.
27 (d) Standing.--Any taxpayer or business shall have standing
28 as a party to a proceeding under this section as long as the
29 taxpayer or business resides within or pays real property taxes
30 to the taxing jurisdiction of the governing body instituting the
19990S0129B0123 - 52 -
1 action.
2 Section 704. Methods of reducing real property tax.
3 (a) General rule.--Any taxing jurisdiction that levies or
4 receives revenue from a county sales and use tax or that levies
5 an income tax under the provisions of this act shall, and any
6 home rule municipality which has elected not to proceed under
7 the provisions of this act may, achieve any required reduction
8 of the real property tax by exercising one of the four options
9 contained in the following paragraphs:
10 (1) The taxing jurisdiction may exclude from taxation by
11 means of the homestead exemption a fixed amount of the
12 assessed value of each homestead property in the taxing
13 jurisdiction within the limits, if any, imposed by Article
14 VIII of the Constitution of Pennsylvania, as provided in
15 subsection (b). The property tax shall be levied at the same
16 millage rate as levied by the taxing jurisdiction for the
17 fiscal year immediately preceding the year of implementation
18 of the sales and use tax or income tax, as appropriate,
19 imposed under this act.
20 (2) The taxing jurisdiction may exclude from taxation by
21 means of the universal exemption a fixed amount of the
22 assessed value of each property in the taxing jurisdiction
23 within the limits, if any, imposed by Article VIII of the
24 Constitution of Pennsylvania. The property tax shall be
25 levied at the same millage rate as levied by the taxing
26 jurisdiction for the fiscal year immediately preceding the
27 year of implementation of the sales and use tax or income
28 tax, as appropriate, imposed under this act.
29 (3) The taxing jurisdiction may reduce the millage rate
30 of the real property tax generally to the same rate on all
19990S0129B0123 - 53 -
1 taxable real property. The reduction in millage rate shall be
2 calculated based on the millage rate levied by the taxing
3 jurisdiction for the fiscal year immediately preceding the
4 year of implementation of the sales and use tax or income
5 tax, as appropriate, imposed under this act.
6 (4) The taxing jurisdiction may reduce the millage rate
7 of the real property tax generally to the same rate on all
8 taxable real property in combination with either the
9 homestead exemption as provided under paragraph (1) or the
10 universal exemption as provided under paragraph (2). The
11 reduction in the real property millage rate shall be
12 calculated based on the millage rate levied by the taxing
13 jurisdiction for the fiscal year immediately preceding the
14 year of implementation of the sales and use tax or income
15 tax, as appropriate, imposed under this act.
16 (b) Limitations.--
17 (1) A governing body may only reduce the real property
18 tax by means of the homestead exemption, separately, or in
19 combination with a general reduction in the taxing
20 jurisdiction's real property millage rate, as provided in
21 subsection (a), if a constitutional amendment authorizing an
22 exclusion from taxation of an amount of the assessed value of
23 homestead property is ratified. In the event the
24 constitutional amendment is not proposed or ratified, nothing
25 in this section shall preclude or prohibit any taxing
26 jurisdiction from reducing the real property tax as is
27 otherwise provided in subsection (a).
28 (2) (i) Any taxing jurisdiction which elects to reduce
29 the real property tax by means of the homestead exemption
30 shall reduce the assessed value of each homestead in the
19990S0129B0123 - 54 -
1 taxing jurisdiction by a fixed amount established by its
2 governing body up to a maximum which shall not exceed the
3 limits contained in section 2(b) of Article VIII of the
4 Constitution of Pennsylvania.
5 (ii) After a countywide revision of assessments
6 within a county where a taxing jurisdiction which has
7 established a homestead exemption is located, the
8 governing body of the taxing jurisdiction shall adjust
9 the amount of the homestead exemption as follows:
10 (A) if the county changes its assessment base by
11 applying a change in the established predetermined
12 ratio, the homestead exemption shall be adjusted by
13 the percentage change between the existing
14 predetermined ratio and the newly established
15 predetermined ratio; or
16 (B) if the county performs a countywide revision
17 of assessments by revaluing all properties and
18 applying an established predetermined ratio, the
19 homestead exemption shall be adjusted by dividing the
20 homestead exemption for the year preceding the
21 countywide revision of assessments by the common
22 level ratio and multiplying the quotient of that
23 calculation by the newly established predetermined
24 ratio.
25 (3) If after reducing the real property tax by means of
26 either the homestead exemption or the universal exemption
27 there are any revenues remaining from a sales and use tax or
28 income tax imposed under this act, the remaining revenues
29 shall be used to further reduce the real property tax by
30 means of a uniform reduction in the millage rate.
19990S0129B0123 - 55 -
1 (c) Definitions.--As used in this section, the following
2 words and phrases shall have the meanings given to them in this
3 subsection:
4 "Common level ratio." The ratio of assessed value to current
5 market value used generally in the county as last determined by
6 the State Tax Equalization Board under the act of June 27, 1947
7 (P.L.1046, No.447), referred to as the State Tax Equalization
8 Board Law.
9 "Established predetermined ratio." The ratio of assessed
10 value to market value established by the board of county
11 commissioners and uniformly applied in determining assessed
12 value in any year.
13 "Homestead." A dwelling, and as much of the land surrounding
14 it as is reasonably necessary for the use of a dwelling as a
15 home, occupied as the principal dwelling place by the owner or
16 owners thereof. The term also includes premises occupied by
17 reason of ownership by individuals as defined in section 301 of
18 the Tax Reform Code. The term also includes premises occupied by
19 reason of ownership in a cooperative housing corporation, mobile
20 homes which are assessed as realty for local property tax
21 purposes and the land, if owned by the person claiming the
22 homestead property exemption upon which the mobile home is
23 situated, and other similar living accommodations, as well as
24 part of a multidwelling or multipurpose building and a part of
25 the land on which it is built. The term also includes premises
26 occupied by reason of ownership of a dwelling located on land
27 owned by a nonprofit incorporated association of which the
28 person claiming the homestead property exemption is a member, if
29 the person is required to pay a pro rata share of the property
30 taxes levied against the association's land. As used in this
19990S0129B0123 - 56 -
1 subsection, the term "owner" includes a person in possession
2 under a contract of sale, deed of trust, life estate, joint
3 tenancy or tenancy in common or by reason of statutes of descent
4 or distribution.
5 CHAPTER 9
6 REGISTER FOR CERTAIN TAXES
7 Section 901. Definitions.
8 The following words and phrases when used in this chapter
9 shall have the meanings given to them in this section unless the
10 context clearly indicates otherwise:
11 "Department." The Department of Community and Economic
12 Development of the Commonwealth.
13 Section 902. Register for taxes under this act.
14 (a) General rule.--It shall be the duty of the department to
15 have available an official continuing register supplemented
16 annually of all sales and use, local personal income, earned
17 income and net profits and municipal service taxes levied under
18 this act.
19 (b) Contents of register.--The register and its supplements
20 shall list:
21 (1) The counties or municipalities levying local
22 personal income tax, earned income and net profits tax,
23 municipal service tax or sales and use tax.
24 (2) The rate of tax as stated in the ordinance levying
25 the tax.
26 (3) The rate on taxpayers.
27 (4) The name and address of the tax officer responsible
28 for administering the collection of the tax and from whom
29 information, forms for reporting and copies of rules and
30 regulations are available.
19990S0129B0123 - 57 -
1 Section 903. Information for register.
2 Information for the register shall be furnished by the chief
3 clerk or secretary of each county or municipality to the
4 department in such manner and on such forms as the department
5 may prescribe. The information must be received by the
6 department no later than July 15 of each year to show new tax
7 enactments, repeals and changes. Failure to comply with this
8 date for filing may result in the omission of the tax levy from
9 the register for that year. Failure of the department to receive
10 information of taxes continued without change may be construed
11 by the department to mean that the information contained in the
12 previous register remains in force.
13 Section 904. Availability and effective period of register.
14 The department shall have the register, with such annual
15 supplements as may be required by new tax enactments, repeals or
16 changes, available upon request no later than August 15 of each
17 year. The effective period for each register shall be from July
18 1 of the year in which it is issued to June 30 of the following
19 year.
20 Section 905. Effect of nonfiling.
21 Employers shall not be required by any ordinance to withhold
22 from the compensation of their employees any local personal
23 income tax, earned income and net profits tax or municipal
24 service tax imposed under the provisions of this act which is
25 not listed in the register or to make reports of compensation in
26 connection with taxes not so listed. If the register is not
27 available by August 15, the register of the previous year shall
28 continue temporarily in effect for an additional period of not
29 more than one year.
30 Section 906. Effect of chapter on liability of taxpayer.
19990S0129B0123 - 58 -
1 The provisions of this chapter shall not affect the liability
2 of any taxpayer for taxes lawfully imposed under this act.
3 CHAPTER 11
4 LIMITATIONS ON SPENDING
5 Section 1101. Definitions.
6 The following words and phrases when used in this chapter
7 shall have the meanings given to them in this section unless the
8 context clearly indicates otherwise:
9 "Authority." A municipal authority created under the act of
10 May 2, 1945 (P.L.382, No.164), known as the Municipality
11 Authorities Act of 1945, or a body corporate and politic created
12 by one or more political subdivisions pursuant to statute.
13 "Political subdivision." A county, city, borough,
14 incorporated town or township, including a county of the first
15 class and a city of the first class or an authority.
16 Section 1102. Political subdivisions exempt from certain laws.
17 After the effective date of this section, a political
18 subdivision shall not be bound by any subsequent enactment of
19 the General Assembly requiring the political subdivision to
20 spend new or additional funds unless at least one of the
21 following apply:
22 (1) at the time of the enactment, there has been
23 appropriated funds estimated by the Local Government
24 Commission, created by the act of May 29, 1935 (P.L.244,
25 No.102), referred to as the Local Government Commission Law,
26 to be sufficient to fund the new or additional expenditure;
27 (2) the General Assembly authorizes the political
28 subdivision to enact a funding source which was not available
29 to the political subdivision prior to the effective date of
30 the statute requiring the expenditure of new or additional
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1 funds and which can be used to generate the amount of funds
2 estimated to be sufficient to fund that expenditure;
3 (3) each house of the General Assembly passes, by a vote
4 of two-thirds of all members elected to each house, a
5 resolution explicitly exempting the Commonwealth from funding
6 a specific statute or providing a funding source for that
7 specific statute; or
8 (4) the statute requiring the political subdivision to
9 spend new or additional funds is either enacted to comply
10 with a Federal requirement or to become eligible for a
11 Federal entitlement, where the Federal requirement or
12 entitlement specifically contemplates actions by political
13 subdivisions.
14 Section 1103. Statutes relating to revenue raising.
15 Except by a vote of two-thirds of all the members elected to
16 each house, the General Assembly may not enact, amend or repeal
17 any law after the effective date of this act if the anticipated
18 effect of enactment, amendment or repeal would be to reduce the
19 authority that any political subdivision has to raise revenues,
20 in the aggregate, as that authority exists on the effective date
21 of this section.
22 Section 1104. Exemptions.
23 The provisions of sections 1102 and 1103 shall not apply to:
24 (1) Any funding formula which exists on the effective
25 date of this section.
26 (2) Any funding necessary to supply any pension benefit
27 which exists on the effective date of this section.
28 (3) Any statute which relates to the enforcement of
29 criminal laws but not to the execution of judicial sentences.
30 (4) Election laws.
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1 (5) General appropriation acts.
2 (6) Special appropriation acts.
3 Section 1105. Mandate review.
4 (a) Duties of Local Government Commission.--The Local
5 Government Commission shall have the following powers and
6 duties:
7 (1) To make estimates of necessary funding, where
8 required, under section 1102.
9 (2) In consultation with the mandate advisory board
10 created in subsection (b), to make recommendations to the
11 General Assembly concerning the termination, continuation or
12 revision of existing or future mandates.
13 (3) In consultation with the Legislative Data Processing
14 Center, to create the necessary information system to perform
15 the duties imposed on it under this chapter.
16 (4) To employ and supervise the personnel required to
17 perform the duties imposed on it under this chapter.
18 (b) Mandate Advisory Board.--There is hereby created a
19 Mandate Advisory Board to the Local Government Commission. The
20 Mandate Advisory Board shall consist of the following members:
21 (1) Four members of the Local Government Commission,
22 appointed by the chairperson of the Local Government
23 Commission, one of whom shall be a member of the majority
24 party of the Senate, one of whom shall be a member of the
25 minority party of the Senate, one of whom shall be a member
26 of the majority party of the House of Representatives and one
27 of whom shall be a member of the minority party of the House
28 of Representatives.
29 (2) Seven members, with one member to be appointed by
30 each of the following organizations:
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1 (i) Pennsylvania League of Cities and
2 Municipalities.
3 (ii) Pennsylvania State Association of Boroughs.
4 (iii) County Commissioners Association of
5 Pennsylvania.
6 (iv) Pennsylvania State Association of Township
7 Commissioners.
8 (v) Pennsylvania State Association of Township
9 Supervisors.
10 (vi) Pennsylvania School Boards Association.
11 (vii) Pennsylvania Municipal Authorities
12 Association.
13 (3) The secretaries or acting secretaries of the
14 following seven departments or their respective designees
15 shall be ex officio members:
16 (i) Department of Education.
17 (ii) Department of Environmental Protection.
18 (iii) Department of Health.
19 (iv) Department of Public Welfare.
20 (v) Department of Labor and Industry.
21 (vi) Department of Community and Economic
22 Development.
23 (vii) Department of Transportation.
24 (c) Terms and vacancies.--Members of the Mandate Advisory
25 Board, except for the ex officio members, shall be appointed for
26 a term of two years. Members may be reappointed to succeed
27 themselves. Vacancies shall be filled by the appointing
28 authority.
29 (d) Chairperson.--The Mandate Advisory Board shall elect a
30 chairperson from its membership.
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1 (e) Powers and duties.--The Mandate Advisory Board shall
2 have the following powers and duties:
3 (1) With the assistance of the Local Government
4 Commission staff, to review current laws constituting
5 mandates on political subdivisions by the Commonwealth.
6 (2) With the approval of the Local Government
7 Commission, to conduct hearings, take testimony and make
8 investigations concerning the impact of mandates within this
9 Commonwealth.
10 (3) To obtain reasonably accessible information and
11 assistance from any municipal organization which appoints a
12 member to the Mandate Advisory Board.
13 (4) To recommend to the Local Government Commission
14 termination, continuation or revision of Commonwealth
15 mandates on political subdivisions.
16 (f) Cooperation by Commonwealth agencies.--Commonwealth
17 agencies, as defined in 42 Pa.C.S. § 102 (relating to
18 definitions), at the request of the chairperson of the Local
19 Government Commission, are authorized and directed to supply
20 information, suggestions, estimates and statistics to assist the
21 Local Government Commission or the Mandate Advisory Board in
22 performing their duties under this chapter.
23 (g) Report.--A preliminary report on the Mandate Advisory
24 Board's work shall be due within one year of the effective date
25 of this act. The report shall establish a timetable for a
26 complete review of all existing mandates.
27 (h) Compensation.--Members of the Mandate Advisory Board
28 shall serve without compensation but shall be reimbursed for all
29 necessary and actual expenses incurred in the performance of
30 their duties.
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1 (i) Expenses.--The funds required by the Local Government
2 Commission and the Mandate Advisory Board to perform their
3 duties under this chapter, including the expenses of the Mandate
4 Advisory Board, shall be appropriated as a separate budget line
5 item to the Local Government Commission.
6 CHAPTER 13
7 LIMITS ON REAL PROPERTY ASSESSMENTS
8 Section 1301. Limits on real property assessments.
9 (a) Limits on counties of the first class.--Notwithstanding
10 any provisions of the act of June 27, 1939 (P.L.1199, No.404),
11 entitled "An act relating to the assessment of real and personal
12 property and other subjects of taxation in counties of the first
13 class; providing for the appointment of members of the board of
14 revision of taxes by the judges of the courts of common pleas;
15 providing for the appointment, by the board, of personal
16 property assessors, real estate assessors and assistant real
17 estate assessors, clerks and other employes; fixing the salaries
18 of members of the board, assessors and assistant assessors, and
19 providing for the payment of salaries and expenses from the
20 county treasury; prescribing the powers and duties of the board
21 and of the assessors, the time and manner of making assessments,
22 of the revision and notice of assessments and of appeals
23 therefrom; prescribing the records of assessments; and repealing
24 existing laws," relating to the assessment of real property and
25 personal property in counties of the first class, to the
26 contrary, when a county of the first class or the board of
27 revision of taxes in a county of the first class makes its
28 annual reassessment at values based upon an established
29 predetermined ratio, as required by law, or when a county of the
30 first class or the board of revision of taxes in a county of the
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1 first class changes its predetermined ratio, any political
2 subdivision within or coterminous with the county of the first
3 class, which hereafter levies its real estate taxes on that
4 revised assessment or valuation, shall for that year reduce its
5 tax rate, if necessary, for the purpose of having the total
6 amount of property tax revenue received exclusively as a result
7 of the reassessment or change in ratio not to exceed 110% of the
8 total amount of property tax revenue received in the preceding
9 year, notwithstanding the increased valuations of properties
10 under the annual reassessment system. For the purpose of
11 determining the total amount of revenue received exclusively as
12 a result of the reassessment or change in ratio for the year,
13 the amount to be levied on newly constructed buildings or
14 structures or on increased valuations based on new improvements
15 made to existing structures shall not be considered. Nothing in
16 this section shall prevent a political subdivision from
17 increasing its tax rate on real property after having lowered
18 its tax rate pursuant to this section, provided that public
19 notice of the tax increase be published and information
20 concerning the estimated amount of real property tax increase by
21 class, expressed as an average percent increase by class, and
22 the estimated revenues to be derived from the tax increase be
23 available for public inspection at least twenty days prior to
24 the official enactment of the tax increase by the responsible
25 elected officials.
26 (b) Limits on counties of the second class.--Notwithstanding
27 any provisions of the act of June 21, 1939 (P.L.626, No.294),
28 referred to as the Second Class County Assessment Law, to the
29 contrary, when a county of the second class makes its annual
30 reassessment at values based upon an established predetermined
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1 ratio, as required by law, or when a county of the second class
2 changes its established predetermined ratio, each political
3 subdivision, which hereafter levies its real estate taxes on
4 that revised assessment or valuation, shall for that year reduce
5 its tax rate, if necessary, for the purpose of having the total
6 amount of property tax revenue received exclusively as a result
7 of the reassessment or change in ratio not to exceed 105% of the
8 total amount of property tax revenue received in the preceding
9 year, notwithstanding the increased valuations of properties
10 under the annual reassessment system. For the purpose of
11 determining the total amount of revenue received exclusively as
12 a result of the reassessment or change in ratio for the year,
13 the amount to be levied on newly constructed buildings or
14 structures or on increased valuations based on new improvements
15 made to existing structures shall not be considered.
16 CHAPTER 15
17 MISCELLANEOUS PROVISIONS
18 Section 1501. Effective date.
19 This act shall take effect as follows:
20 (1) Sections 1102, 1103 and 1104 shall take effect
21 January 1, 2000.
22 (2) The remainder of this act shall take effect
23 immediately.
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