Bill Text: PA HB2019 | 2011-2012 | Regular Session | Introduced

---

Bill Title: Imposing an additional sales and use tax and personal income tax; prohibiting the imposition of real property tax by school districts and municipalities; establishing the School Property Tax Elimination Fund; and providing for school district and municipality tax options and for duties of the Department of Revenue and the Legislative Budget and Finance Committee.

Sponsorship: Partisan Bill (Republican 12)

Status: (Introduced - Dead) 2011-11-17 - Referred to FINANCE [HB2019 Detail]

Download: Pennsylvania-2011-HB2019-Introduced.html

---

PRINTER'S NO. 2774
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No. 2019 Session of2011
INTRODUCED BY METCALFE, BARRAR, BLOOM, CREIGHTON, EVERETT, GROVE, KAUFFMAN, METZGAR, MILLER, RAPP, SAYLOR, SCAVELLO AND TALLMAN, NOVEMBER 17, 2011
REFERRED TO COMMITTEE ON FINANCE, NOVEMBER 17, 2011
AN ACT
Imposing an additional sales and use tax and personal income
tax; prohibiting the imposition of real property tax by
school districts and municipalities; establishing the School
Property Tax Elimination Fund; and providing for school
district and municipality tax options and for duties of the
Department of Revenue and the Legislative Budget and Finance
Committee.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Short title.
This act shall be known and may be cited as the Real Property
Tax Elimination Act.
Section 2. 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:
"Base year." The first fiscal year of a school district,
municipality or county beginning after June 30, 2011.
"Department." The Department of Revenue of the Commonwealth.
"Fund." The School Property Tax Elimination Fund established
under section 5.
"Personal income." Income enumerated in section 303 of the
act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
of 1971, as returned to and ascertained by the Department of
Revenue, subject, however, to any correction thereof for fraud,
evasion or error as finally ascertained by the Commonwealth.
"Real property tax increase." An increase in real property
taxes resulting from a millage increase, modification in the
predetermined ratio or countywide reassessment.
Section 3. Real property tax freeze.
No school district or municipality shall authorize a real
property tax increase in any fiscal year beginning after June
30, 2009.
Section 4. Real property tax reduction.
(a) School districts.--A school district shall be subject to
the following with respect to the levying, assessment and
collection of real property tax:
(1) For the first fiscal year beginning after June 30,
2012, a school district shall reduce in a uniform manner by
one-third the base-year amount of its real property taxes.
(2) For the first fiscal year beginning after June 30,
2013, a school district shall reduce in a uniform manner by
two-thirds the base-year amount of its real property taxes.
(3) For the first fiscal year beginning after June 30,
2014, and each fiscal year thereafter, no school district
shall have any power or authority to levy, assess or collect
real property taxes. This paragraph shall not apply to the
collection of delinquent taxes.
(b) Municipalities.--Municipalities shall be subject to the
following with respect to the levying, assessment and collection
20110HB2019PN2774 - 2 -
of real property tax:
(1) For the first fiscal year beginning after December
31, 2014, each municipality shall reduce in a uniform manner
by one-third the base-year amount of its real property tax.
(2) For the first fiscal year beginning after December
31, 2015, each municipality shall reduce in a uniform manner
by two-thirds the base-year amount of its real property tax.
(3) For the first fiscal year beginning after December
31, 2016, and each fiscal year thereafter, no municipality
shall have any power or authority to levy, assess or collect
real property taxes. This paragraph shall not apply to the
collection of delinquent taxes.
Section 5. School Property Tax Elimination Fund.
(a) Establishment.--
(1) The School Property Tax Elimination Fund is
established in the State Treasury. The State Treasurer shall
be custodian of the fund, which shall be subject to the
provisions of law applicable to funds listed in section 302
of the act of April 9, 1929 (P.L.343, No.176), known as The
Fiscal Code.
(2) Taxes imposed under sections 6 and 8 shall be
collected by the department and paid to the State Treasurer
and, along with interest and penalties, shall be credited to
the fund not less frequently than every two weeks. During any
period prior to the credit of moneys to the fund, interest
earned on moneys received by the department and paid to the
State Treasurer under this act shall be deposited into the
fund.
(3) All moneys in the fund, including, but not limited
to, moneys credited to the fund under this section, prior
20110HB2019PN2774 - 3 -
year encumbrances and the interest earned thereon, shall not
lapse or be transferred to any other fund, but shall remain
in the fund and shall be used exclusively as provided in this
section.
(4) Pending their disbursement, moneys received on
behalf of or deposited into the fund shall be invested or
reinvested as are other moneys in the custody of the State
Treasurer in the manner provided by law. All earnings
received from the investment or reinvestment of the moneys
shall be credited to the fund.
(b) Disbursements.--On or before the tenth day of every
month, the State Treasurer shall make disbursements to school
districts out of the moneys which are contained in the fund on
the last day of the previous month. Distributions to school
districts shall be based on the amount of real property tax
collected by each school district during the base year as
follows:
(1) During the first fiscal year beginning after June
30, 2012, an amount equivalent to one-third of the real
property tax revenues collected by the school district during
the base year shall be distributed to the school district.
(2) During the first fiscal year beginning after June
30, 2013, an amount equivalent to two-thirds of the real
property tax revenues collected by the school district during
the base year shall be distributed to the school district.
(3) During the first fiscal year beginning after June
30, 2014, and each fiscal year thereafter, an amount
equivalent to the total real property tax revenues collected
by the school district during the base year shall be
distributed to the school district.
20110HB2019PN2774 - 4 -
(c) Transfer of portion of surplus.--In any fiscal year in
which the Secretary of the Budget certifies that there is a
surplus of operating funds in the General Fund, 75% of such
surplus shall be deposited by the end of the next succeeding
quarter into the School Property Tax Elimination Fund.
Section 6. Imposition of sales and use tax.
(a) Sales tax.--There is hereby imposed upon each separate
sale at retail of tangible personal property or services, as
defined in Article II of the act of March 4, 1971 (P.L.6, No.2),
known as the Tax Reform Code of 1971, a tax on the purchase
price. The tax shall be collected by the vendor from the
purchaser and shall be paid over to the Commonwealth as provided
in Article II of the Tax Reform Code of 1971.
(b) Use tax.--There is hereby imposed upon the use of
tangible personal property purchased at retail and on services
purchased at retail as defined in Article II of the Tax Reform
Code of 1971 a tax on the purchase price. The tax shall be paid
over to the Commonwealth by the person who makes the use. The
use tax imposed under this subsection shall not be paid over to
the Commonwealth by any person who has paid the tax imposed by
subsection (a) or has paid the tax imposed by this subsection to
the vendor with respect to the use.
(c) Rate.--The tax authorized by subsections (a) and (b)
shall be imposed at the following rates:
(1) For the period July 1, 2012, to June 30, 2013, 1%.
(2) For the period July 1, 2013, to June 30, 2014, 2%.
(3) After June 30, 2014, 3%.
(d) Construction.--The sales and use tax imposed by this act
shall be in addition to any tax imposed under Article II of the
Tax Reform Code of 1971. The provisions of Article II of the Tax
20110HB2019PN2774 - 5 -
Reform Code of 1971 shall apply to the tax.
Section 7. Computation of sales and use tax.
(a) One percent rate.--The amount of tax imposed by section
6 shall be computed in the manner set forth in section 503(e)(2)
of the act of June 5, 1991 (P.L.9, No.6), known as the
Pennsylvania Intergovernmental Cooperation Authority Act for
Cities of the First Class, for a 1% tax rate.
(b) Two percent rate.--The amount of tax imposed by section
6 shall be computed as follows for a 2% tax rate:
(1) If the purchase price is 30¢ or less, no additional
tax shall be collected.
(2) If the purchase price is 31¢ or more but less than
51¢, 1¢ shall be collected.
(3) If the purchase price is 51¢ or more but less than
$1.01, 2¢ shall be collected.
(4) If the purchase price is more than $1, 2% of each
dollar of purchase price plus the above bracket charges upon
any fractional part of a dollar in excess of even dollars
shall be collected.
(c) Three percent rate.--The amount of tax imposed by
section 6 shall be computed as follows for a 3% tax rate:
(1) If the purchase price is 33¢ or less, no additional
tax shall be collected.
(2) If the purchase price is 34¢ or more but less than
56¢, 1¢ shall be collected.
(3) If the purchase price is 56¢ or more but less than
78¢, 2¢ shall be collected.
(4) If the purchase price is 78¢ or more but less than
$1.01, 3¢ shall be collected.
(5) If the purchase price is more than $1, 3% of each
20110HB2019PN2774 - 6 -
dollar of purchase price plus the above bracket charges upon
any fractional part of a dollar in excess of even dollars
shall be collected.
Section 8. Imposition of personal income tax.
(a) Residents.--Every resident individual, estate or trust
shall be subject to, and shall pay for the privilege of
receiving each of the classes of income enumerated in section
303 of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
Reform Code of 1971, a tax upon each dollar of income received
by that resident during that resident's taxable year at the
following rates:
(1) 0.5% for the second half of the taxable year
commencing with or within calendar year 2011 through the
first half of the taxable year commencing with or within
calendar year 2012;
(2) 1% for the second half of the taxable year
commencing with or within calendar year 2013 through the
first half of the taxable year commencing with or within
calendar year 2014;
(3) 1.5% for the second half of the taxable year
commencing with or within calendar year 2014 through the
first half of the taxable year commencing with or within
calendar year 2015; and
(4) for the second half of the taxable year commencing
with or within calendar year 2015, and each taxable year
thereafter, the rate established by the department under
subsection (c), not to exceed 1.5%.
(b) Nonresidents.--Every nonresident individual, estate or
trust shall be subject to, and shall pay for the privilege of
receiving each of the classes of income hereinafter enumerated
20110HB2019PN2774 - 7 -
in section 303 of the Tax Reform Code of 1971 from sources
within this Commonwealth, a tax upon each dollar of income
received by that nonresident during that nonresident's taxable
year at the following rates:
(1) 0.5% for the second half of the taxable year
commencing with or within calendar year 2012 through the
first half of the taxable year commencing with or within
calendar year 2013;
(2) 1% for the second half of the taxable year
commencing with or within calendar year 2013 through the
first half of the taxable year commencing with or within
calendar year 2014;
(3) 1.5% for the second half of the taxable year
commencing with or within calendar year 2014 through the
first half of the taxable year commencing with or within
calendar year 2015; and
(4) for the second half of the taxable year commencing
with or within calendar year 2015 and each taxable year
thereafter, the rate established by the department under
subsection (c), not to exceed 1.5%.
(c) Rates fixed annually by department.--Beginning with the
second half of the taxable year commencing with or within the
calendar year 2014, and each taxable year thereafter, the
department shall annually establish the rate of tax under this
section, uniform for residents and nonresidents, such that the
amounts due to be disbursed to school districts in accordance
with section 5(b) are available for payment. The department
shall publish in the Pennsylvania Bulletin no later than June 1
of each year the rate of tax which shall take effect July 1 of
each year.
20110HB2019PN2774 - 8 -
(d) Construction.--The personal income tax imposed by this
act shall be in addition to any tax imposed by the Commonwealth
under Article III of the Tax Reform Code of 1971. The provisions
of Article III of the Tax Reform Code of 1971 shall apply to the
tax.
Section 9. School district tax options.
(a) General rule.--A school district may generate additional
revenue to offset revenue lost as a result of the implementation
of this act by using any combination of the following:
(1) An increase in the rate of its tax on earned income
beyond maximum rates provided by law.
(2) The imposition of an earned income tax under the
provisions of section 13 of the act of December 31, 1965
(P.L.1257, No.511), known as The Local Tax Enabling Act.
(3) The imposition of a personal income tax.
(b) Resolution required.--Taxes levied by a school district
shall be passed by resolution by the board of school directors
of the school district under the authority of this act.
(c) Increases subject to referendum.--Except as provided in
subsection (e), no school district may implement or increase a
tax under subsection (a) without first obtaining the approval of
the electorate of the affected school district in a referendum
at the primary election immediately preceding the fiscal year of
the proposed tax or tax increase.
(d) Disapproval.--Whenever the electorate fails to approve
the proposed referendum question to implement a tax or increase
the rate of a tax under subsection (a), the school district
shall be limited to the taxes and rates in effect prior to the
referendum.
(e) Referendum exception.--
20110HB2019PN2774 - 9 -
(1) No referendum shall be required under subsection (c)
if:
(i) there is an immediate threat of serious physical
harm or injury to the students, staff or residents of the
school district; and
(ii) the court of common pleas in the judicial
district in which the school district is located approves
the referendum exception.
(2) The court shall determine the appropriate duration
of the tax imposition or increase and may retain continuing
jurisdiction. The court may, on its own motion or on petition
of an interested party, revoke approval for or order
rescission of a tax increase imposed under this section.
(f) Standing.--A person shall have standing as a party to a
proceeding under this section as long as the person resides
within or pays earned income taxes to the taxing jurisdiction of
the school district instituting the action.
Section 10. Municipality tax options.
(a) General rule.--A municipality may offset revenues lost
as a direct result of the phaseout of its authority to impose a
tax on real property by using any combination of the following:
(1) An increase in the rate of its tax on earned income
beyond maximum rates provided by law.
(2) The imposition, by a county, of an earned income tax
under the provisions of section 13 of the act of December 31,
1965 (P.L.1257, No.511), known as The Local Tax Enabling Act.
(3) The imposition of a personal income tax.
(b) Ordinance required.--Taxes levied by a municipality
shall be by ordinance passed under the authority of this act.
(c) Increases subject to referendum.--Except as provided in
20110HB2019PN2774 - 10 -
subsection (e), no municipality may levy or increase a tax to
raise revenue beyond that required as an offset under subsection
(a) without first obtaining the approval of the electorate of
the affected municipality in a referendum at the primary
election immediately preceding the fiscal year of the proposed
tax increase.
(d) Disapproval.--Whenever the electorate fails to approve
the proposed referendum question to increase the tax or rate of
a tax under subsection (a), the municipality shall be limited to
the taxes and rates in effect prior to the referendum.
(e) Referendum exception.--
(1) No referendum shall be required under subsection (c)
if:
(i) there is an immediate threat of serious physical
harm or injury to the residents of the municipality; and
(ii) the court of common pleas in the judicial
district in which the municipality is located approves
the referendum exception.
(2) The court shall determine the appropriate duration
of the tax imposition or increase and may retain continuing
jurisdiction. The court may, on its own motion or on petition
of an interested party, revoke approval for or order
rescission of a tax imposed or increased under this section.
(f) Standing.--A person shall have standing as a party to a
proceeding under this section as long as the person resides
within or pays earned income taxes to the taxing jurisdiction of
the municipality instituting the action.
Section 11. Collection of tax.
Any tax imposed by a school district or municipality under
section 9 or 10 shall be collected by the department in the same
20110HB2019PN2774 - 11 -
manner authorized for the tax imposed under Article III of the
act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
of 1971, and shall be transferred by the State Treasurer to the
school district or municipality that imposed it.
Section 12. Annual review of budget by Legislative Budget and
Finance Committee.
(a) Duty to conduct annual review.--The Legislative Budget
and Finance Committee shall conduct an annual review of the
budget submitted by the Governor to the General Assembly in
accordance with law. The purpose of the review shall be to
identify efficiency improvements in the programs that receive
appropriations through the General Appropriation Act and to
calculate the amount of savings to the General Fund from those
improvements. The Legislative Budget and Finance Committee shall
report its findings and recommendations from the annual review
in a timely manner to the General Assembly.
(b) Legislative intent.--It is the intent of the General
Assembly that the savings calculated and reported by the
Legislative Budget and Finance Committee under this section
shall appear as a line item in the General Appropriation Act by
appropriating an amount equal to those savings for transfer from
the General Fund to the School Property Tax Elimination Fund.
Section 20. Effective date.
This act shall take effect immediately.
20110HB2019PN2774 - 12 -