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PRINTER'S NO. 260
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
230
Session of
2017
INTRODUCED BY SONNEY, RADER AND KORTZ, FEBRUARY 1, 2017
REFERRED TO COMMITTEE ON FINANCE, FEBRUARY 1, 2017
AN ACT
Providing for county property tax reduction; and establishing
the Property Tax Reduction and Diversification Fund.
TABLE OF CONTENTS
Chapter 1. Preliminary Provisions
Section 101. Short title.
Section 102. Scope of act.
Section 103. Definitions.
Chapter 3. Optional Sales, Use and Occupancy Tax for County
Property Tax Relief
Section 301. Construction.
Section 302. Imposition.
Section 303. Situs.
Section 304. License.
Section 305. Rules, regulations and collection costs.
Section 306. Ordinance.
Section 307. Property Tax Reduction and Diversification Fund.
Section 308. Disbursements.
Section 309. Use of funds.
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Chapter 5. Optional Income Tax for County Property Tax
Reduction and Diversification
Section 501. Authorization.
Section 502. Ordinance.
Section 503. Use of funds.
Section 504. Credits.
Section 505. Exemption and special provisions.
Section 506. Earned income and net profits tax rates.
Section 507. County earned income and net profits tax
collection.
Chapter 7. Optional County Business Privilege or Mercantile Tax
for Property Tax Reduction and Diversification
Section 701. Authorization.
Section 702. Ordinance.
Section 703. Use of funds.
Section 704. Mercantile or business privilege tax.
Section 705. Exclusions.
Section 706. Administration.
Chapter 51. Miscellaneous Provisions
Section 5101. (Reserved).
Section 5102. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the County
Property Tax Reduction and Diversification Act.
Section 102. Scope of act.
This act authorizes a county to levy, assess and collect
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certain taxes as a means of reducing property taxes and
providing for tax diversification.
Section 103. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Bank." As defined in section 102 of the Banking Code of
1965.
"Bank and trust company." As defined in section 102 of the
Banking Code of 1965.
"Banking Code of 1965." The act of November 30, 1965
(P.L.847, No.356), known as the Banking Code of 1965.
"Department." The Department of Revenue of the Commonwealth.
"Domicile." As defined in section 501 of the Local Tax
Enabling Act.
"Earned income." As defined in section 501 of the Local Tax
Enabling Act.
"Earned income and net profits tax." The tax levied by a
county on earned income and net profits under this act.
"Local Tax Enabling Act." The act of December 31, 1965
(P.L.1257, No.511), known as The Local Tax Enabling Act.
"Mobile home." As defined in 75 Pa.C.S. § 102 (relating to
definitions).
"Motor vehicle." As defined in 75 Pa.C.S. § 102.
"Net profits." As defined in section 501 of the Local Tax
Enabling Act.
"Private bank." As defined in section 102 of the Banking
Code of 1965.
"Purchase at retail." As defined in section 201 of the Tax
Reform Code.
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"Resident." As defined in section 501 of the Local Tax
Enabling Act.
"Sale at retail." As defined in section 201 of the Tax
Reform Code.
"Savings bank." As defined in section 102 of the Banking
Code of 1965.
"Semitrailer." As defined in 75 Pa.C.S. § 102.
"Service address." The address where:
(1) telephone equipment is located and to which a
telephone number is assigned;
(2) a telegraph originated; or
(3) the meter which registers where the service is
located.
"Services." A service that a tax has been imposed on under
section 202 of the Tax Reform Code.
"Tangible personal property." As defined in section 201 of
the Tax Reform Code.
"Tax collection district." A tax collection district
established under section 504 of the Local Tax Enabling Act.
"Tax Reform Code." The act of March 4, 1971 (P.L.6, No.2),
known as the Tax Reform Code of 1971.
"Taxpayer Relief Act." The act of June 27, 2006 (1st
Sp.Sess., P.L.1873, No.1), known as the Taxpayer Relief Act.
"Trailer." As defined in 75 Pa.C.S. § 102.
"Trust company." As defined in section 102 of the Banking
Code of 1965.
CHAPTER 3
OPTIONAL SALES, USE AND OCCUPANCY TAX
FOR COUNTY PROPERTY TAX RELIEF
Section 301. Construction.
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The tax imposed under this chapter shall be in addition to
any tax imposed by the Commonwealth under Article II of the Tax
Reform Code.
Section 302. Imposition.
(a) Sales.--A county may levy and assess a tax on the
purchase price on each separate sale at retail of tangible
personal property or services within the county. The tax shall
be collected by the vendor from the purchaser and shall be paid
to the Commonwealth as provided under this chapter.
(b) Use.--
(1) If a county imposes the tax authorized under
subsection (a), it shall levy, assess and collect a tax on
the purchase price for the use of tangible personal property
purchased at retail and on services purchased at retail
within the county.
(2) The tax under paragraph (1) shall be paid to the
Commonwealth by the person who uses the tangible personal
property or services.
(3) The use tax imposed under this subsection shall not
be paid to the Commonwealth by a person who has paid the tax
imposed under subsection (a) or has paid the tax imposed
under this subsection to the vendor with respect to the use.
(c) Occupancy.--
(1) If a county imposes the tax authorized under
subsection (a), it shall levy, assess and collect an excise
tax on the rent for each occupancy of a room in a hotel in
the county.
(2) The tax under paragraph (1) shall be collected by
the operator or owner from the occupant and paid to the
Commonwealth.
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(d) Rate and uniformity.--
(1) The tax authorized by subsections (a), (b) and (c)
shall be imposed at a rate of 1%.
(2) The tax imposed by subsections (a), (b) and (c)
shall be uniform.
(e) Computation.--The tax imposed under this section shall
be computed as follows:
(1) If the purchase price is 50¢ or less, no tax shall
be collected.
(2) If the purchase price is 51¢ or more but less than
$1.51, 1¢ shall be collected.
(3) If the purchase price is $1.51 or more but less than
$2.51, 2¢ shall be collected.
(4) If the purchase price is $2.51 or more but less than
$3.51, 3¢ shall be collected.
(5) If the purchase price is $3.51 or more but less than
$4.51, 4¢ shall be collected.
(6) If the purchase price is $4.51 or more but less than
$5.51, 5¢ shall be collected.
(7) If the purchase price is $5.51 or more but less than
$6.51, 6¢ shall be collected.
(8) If the purchase price is $6.51 or more but less than
$7.51, 7¢ shall be collected.
(9) If the purchase price is $7.51 or more but less than
$8.51, 8¢ shall be collected.
(10) If the purchase price is $8.51 or more but less
than $9.51, 9¢ shall be collected.
(11) If the purchase price is $9.51 or more but less
than $10.01, 10¢ shall be collected.
(12) If the purchase price is more than $10, 1% of each
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$10 purchase price plus the above bracket charges upon any
fractional part of a $10 increment shall be collected.
Section 303. Situs.
(a) Retail sales.--Except as provided under this subsection,
a sale at retail shall be deemed to be consummated at the place
of business of the retailer unless the tangible personal
property sold is delivered by the retailer or his agent to an
out-of-State destination, to a common carrier for delivery to an
out-of-State destination or to the United States mail for
delivery to an out-of-State destination. If a retailer has more
than one place of business in this Commonwealth which
participates in the sale, the sale shall be deemed to be
consummated at the place of business of the retailer where the
initial order for the tangible personal property is taken,
notwithstanding whether the order will be forwarded elsewhere
for acceptance, approval of credit, shipment or billing. A sale
by a retailer's employee shall be deemed to be consummated at
the place of business from which the employee works.
(b) Vehicle, aircraft and motorcraft sales.--The sale at
retail or use of a motor vehicle, trailer, semitrailer, mobile
home, motorboat, aircraft or other similar tangible personal
property, required under Federal or State law to be registered
or licensed, shall be determined as specified under section 201-
A of the Tax Reform Code.
(c) Utility services.--The sale or use of steam, natural and
manufactured gas, electricity, telephone and telegraph service
shall be deemed to occur at the service address, notwithstanding
where the services are rendered.
(d) Mobile telecommunications services.--The situs of the
sale or use of mobile telecommunication services shall be
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determined as specified under section 203-A of the Tax Reform
Code.
Section 304. License.
The license issued under Article II of the Tax Reform Code or
a separate license may be issued by the department for the
collection and reporting of the taxes imposed by section 302.
The license shall be nonassignable and subject to renewal as
required by the department by regulation, but not more
frequently than once within a five-year period. No fee may be
charged for either a license or a renewal. Failure to obtain a
license shall not relieve a person of liability to pay the taxes
imposed under this chapter.
Section 305. Rules, regulations and collection costs.
(a) Regulations.--Rules and regulations promulgated under
section 270 of the Tax Reform Code and which are consistent with
this chapter shall apply to the taxes imposed under this
chapter.
(b) Administration.--The department:
(1) Shall administer and enforce this chapter and may
promulgate and enforce rules and regulations consistent with
this chapter.
(2) May determine nonretroactive applicability of a
regulation.
(c) Collection costs.--
(1) The department may, for administration costs, retain
an amount equal to the cost of collection and shall inform
each county in writing monthly of the sum retained and the
costs of collection reimbursed.
(2) To provide a timely forecast and assure
consideration of the sum retained, the department shall
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estimate its costs of collection for the next fiscal year and
provide the estimate and supporting detail to:
(i) The chairman and minority chairman of the
Appropriations Committee of the Senate.
(ii) The chairman and minority chairman of the
Appropriations Committee of the House of Representatives.
(iii) Each county.
(3) At the time the annual operating budget for the
department is submitted to the General Assembly, the
department shall submit to the chairman and minority chairman
of the Appropriations Committee of the Senate and to the
chairman and minority chairman of the Appropriations
Committee of the House of Representatives the actual sum
retained for costs of collection in the preceding fiscal
year, along with supporting details.
Section 306. Ordinance.
A county may impose a sales, use and occupancy tax under this
chapter by ordinance.
Section 307. Property Tax Reduction and Diversification Fund.
(a) Establishment.--There is established in the State
Treasury the Property Tax Reduction and Diversification Fund.
The State Treasurer shall be custodian of the fund, which shall
be subject to section 302 of the act of April 9, 1929 (P.L.343,
No.176), known as The Fiscal Code. The State Treasurer shall
establish within the fund an account for each county.
(b) Deposits into fund.--
(1) Taxes imposed under this chapter shall be received
by the department and paid to the State Treasurer and shall,
with interest and penalties, minus collection costs allowed
under this chapter, refunds and credits paid, be credited to
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the appropriate account at least every month.
(2) For a period prior to the credit of money to each
account, interest earned on money received by the department
and paid to the State Treasurer under this chapter shall be
credited to the respective account.
(c) Lapsing and interfund transfers prohibited.--Money in
the fund and credited to an account, including money credited to
an account under this section, a prior year encumbrance and
earned interest:
(1) May not lapse or be transferred to another fund or
account.
(2) Shall remain in the fund and be credited to the
appropriate account.
(3) Must be used as provided under this act.
(d) Investment.--Pending its disbursement, money received on
behalf of or deposited into the fund shall be invested or
reinvested as is other money in the custody of the State
Treasurer. Earnings received from the investment or reinvestment
of the money shall be credited to each account.
Section 308. Disbursements.
On July 1 of each year, the State Treasurer shall make
disbursements from the account of a county.
Section 309. Use of funds.
Fifty percent of the funds disbursed from the Property Tax
Reduction and Diversification Fund shall be used to reduce
property tax millage rates.
CHAPTER 5
OPTIONAL INCOME TAX
FOR COUNTY PROPERTY TAX REDUCTION
AND DIVERSIFICATION
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Section 501. Authorization.
(a) Authority.--A county may levy, assess and collect a tax
on earned income under this section to fund property tax
reductions and tax diversification in the county. Except as
provided under this chapter, the tax shall be in addition to any
tax imposed under 53 Pa.C.S. § 8701 (relating to general tax
authorization), this act, Chapter 4 of the Local Tax Enabling
Act, the Taxpayer Relief Act, the Tax Reform Code or any other
act.
(b) Preemption.--No act may vacate or preempt an ordinance
passed or adopted under this chapter or an act which permits the
imposition of a tax by a county, unless the act expressly
vacates or preempts the authority to pass or adopt resolutions.
Section 502. Ordinance.
(a) Authorization.--A county may impose an earned income and
net profits tax authorized under this chapter by ordinance.
(b) Execution of tax rate.--A tax authorized under this
section shall be self-executing and shall take effect beginning
on the first day of the fiscal year which begins after the tax
is authorized. A tax rate under this section shall continue in
force on a fiscal year basis without annual reenactment, except
in a year in which the rate of the tax is changed.
Section 503. Use of funds.
Fifty percent of the funds generated from an earned income
and net profits tax authorized under this chapter shall be used
to directly reduce county real property tax millage rates.
Section 504. Credits.
(a) General rule.--Except as provided under subsection (b),
section 317 of the Local Tax Enabling Act shall apply to a
county to determine a credit applicable to a tax imposed under
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section 501.
(b) Limitation.--Payment of a tax on income to a state other
than this Commonwealth or to a political subdivision located
outside this Commonwealth by a taxpayer of a political
subdivision located in this Commonwealth may not be credited to
nor allowed as a deduction from the liability of the person for
an income tax imposed by a county or political subdivision under
the authority of this chapter.
Section 505. Exemption and special provisions.
A county that imposes an earned income and net profits tax
under this chapter may exempt from the payment of that tax a
person whose total income from any source is less than $12,000.
Section 506. Earned income and net profits tax rates.
(a) Initial tax rate.--The initial rate of the earned income
and net profits tax shall be established by the county and may
not exceed a rate of 1%.
(b) Subsequent tax rate.--
(1) A county or political subdivision, other than a
school district, may increase the earned income and net
profits tax rate under subsection (a) by ordinance as
provided under this subsection.
(2) Except as provided under paragraph (3), beginning
with the first fiscal year after the imposition of an earned
income and net profits tax and for each fiscal year
thereafter, a county may not increase the earned income and
net profits tax rate by an amount greater than:
(i) the average percentage change of the Statewide
average weekly wage; or
(ii) the percentage change of the employment cost
index for the previous fiscal year.
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(3) A county or political subdivision may increase the
rate of the earned income and net profits tax by more than
the limit under paragraph (2) if:
(i) the county or political subdivision submits a
referendum stating the specific rate of the tax increase
must be submitted to the electors of the county at a
municipal or general election; and
(ii) a majority of the electors voting on the
question approves the increase.
(4) A county or political subdivision acting under
paragraph (3) shall submit the referendum question to the
appropriate election official not later than 60 days prior to
a municipal or general election.
Section 507. County earned income and net profits tax
collection.
Chapters 5 and 7 of the Local Tax Enabling Act shall apply to
the collection of income taxes by counties. The county shall use
the selected tax collector for the tax collection district in
which the county is located. If a county is located in more than
one taxing collection district, the county shall use the tax
collector that serves a majority of the county.
CHAPTER 7
OPTIONAL COUNTY BUSINESS
PRIVILEGE OR MERCANTILE TAX
FOR PROPERTY TAX
REDUCTION AND DIVERSIFICATION
Section 701. Authorization.
(a) Authority.--A county may levy, assess and collect a
business privilege or mercantile tax under this chapter to fund
property tax reductions and tax diversification in the county.
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Except as provided under this chapter, the tax shall be in
addition to any tax imposed under 53 Pa.C.S. § 8701 (relating to
general tax authorization), this act, Chapter 4 of the Local Tax
Enabling Act, the Taxpayer Relief Act, the Tax Reform Code or
any other act.
(b) Preemption.--No act may vacate or preempt an ordinance
passed or adopted under this chapter or an act which permits the
imposition of a tax by a county, unless the act expressly
vacates or preempts the authority to pass or adopt resolutions.
Section 702. Ordinance.
(a) Imposition.--A county may impose a business privilege or
mercantile tax under this chapter by ordinance.
(b) Execution of tax rate.--A tax authorized under this
section shall be self-executing and shall take effect beginning
on the first day of the fiscal year which begins after the tax
is authorized. A tax rate under this section shall continue in
force on a fiscal year basis without annual reenactment, except
in a year in which the rate of the tax is changed.
Section 703. Use of funds.
Fifty percent of the funds generated from business privilege
or mercantile tax authorized under this chapter shall be used to
directly reduce county real property tax millage rates.
Section 704. Mercantile or business privilege tax.
(a) Wholesale dealer.--A school district may levy, assess
and collect a tax on each dollar of the whole volume of business
transacted by a wholesale dealer in goods, wares and
merchandise.
(b) Retail sales.--A school district may levy, assess and
collect a tax on each dollar of sales by:
(1) A retail dealer in goods, wares and merchandise,
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including a proprietor of a restaurant or other place where
food, drink and refreshments are served.
(2) Providers of services.
(c) Transactions partially free of tax.--No tax shall be
levied on the dollar volume of business transacted by wholesale
and retail dealers derived from the resale of goods, wares and
merchandise taken by a dealer as a trade-in or as part payment
for other goods, wares and merchandise, except to the extent
that the resale price exceeds the trade-in allowance.
Section 705. Exclusions.
A tax under section 704 may not be levied, assessed or
collected on:
(1) The gross receipts from utility service of a person
or company whose rates and services are fixed and regulated
by the Pennsylvania Public Utility Commission, on a public
utility service rendered by the person or company, on a
privilege or transaction involving the rendering of the
public utility service or on a Federal Energy Regulation
Commission-approved qualifying facility.
(2) Any of the following:
(i) Goods and articles manufactured in the school
district.
(ii) The by-product of manufacture.
(iii) Minerals, timber, natural resources and farm
products produced in the school district.
(iv) The preparation or processing of an item under
subparagraph (iii) for use or market.
(v) A privilege, act or transaction related to the
business of manufacturing and the production, preparation
or processing of a mineral, timber and natural resource
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or farm product by a manufacturer, producer and a farmer
with respect to the good, article and product of their
own manufacture, production or growth.
(vi) A privilege, act or transaction relating to the
business of processing by-products of a manufacture.
(vii) (A) Except as provided under clause (B), the
transportation, loading, unloading, dumping or
storage of a good, article, product or by-product
under this paragraph.
(B) A school district may levy, assess and
collect a tax on:
(I) A person using a municipal service.
(II) The personal income of an individual
engaged in an activity under subclause (I),
notwithstanding if the individual is doing
business as an individual proprietorship or as a
member of a partnership or other association.
(3) Gross receipts or part of gross receipts which are:
(i) A discount allowed to a purchaser as a cash
discount for prompt payment of a purchaser's bill.
(ii) A charge advanced by a seller for freight,
delivery or other transportation for the purchaser in
accordance with the terms of a contract of sale.
(iii) Received for the sale of an article of
personal property which was acquired by the seller as a
trade-in, to the extent that the gross receipts in the
sale of the article taken in trade does not exceed the
amount of trade-in allowance made in acquiring the
article.
(iv) A refund, credit or allowance given to a
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purchaser on account of a defect in goods sold or
merchandise returned.
(v) Pennsylvania sales tax and any sales tax, use
tax and occupancy tax imposed under law.
(vi) Based on the value of exchanges or transfers
between one seller and another seller who transfers
property with the understanding that property of an
identical description will be returned at a subsequent
date, except that, if sellers engaged in similar lines of
business exchange property and one of the sellers makes
payment to the other seller in addition to the property
exchanged, the additional payment received may be
included in the gross receipts of the seller receiving
the additional cash payment.
(vii) A receipt of sellers from sales to other
sellers in the same line if the seller transfers the
title or possession at the same price for which the
seller acquired the merchandise.
(viii) A transfer between one department, branch or
division of a corporation or other business entity of
goods, wares and merchandise to another department,
branch or division of the same corporation or business
entity and which are properly recorded to reflect the
interdepartmental transactions.
(ix) A transfer attributable to an activity
occurring outside the taxing authority. Gross receipts
shall be attributed to the jurisdiction in which the
activities generating the receipts occur.
(4) The gross receipts of:
(i) A bank, bank and trust company, private bank,
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savings bank or trust company.
(ii) An institution or entity subject to the
supervision of the Department of Banking and Securities
under section 201 of the act of May 15, 1933 (P.L.565,
No.111), known as the Department of Banking and
Securities Code.
(iii) A national bank.
(iv) A similar institution or entity established
under Federal or State law.
(5) The gross receipts of a distributor or importing
distributor of malt or brewed beverages subject to licensure
under the act of April 12, 1951 (P.L.90, No.21), known as the
Liquor Code.
Section 706. Administration.
A tax enacted under this chapter shall be administered in the
same manner as a tax administered under the Local Tax Enabling
Act.
CHAPTER 51
MISCELLANEOUS PROVISIONS
Section 5101. (Reserved).
Section 5102. Effective date.
This act shall take effect immediately.
20170HB0230PN0260 - 18 -
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