PRINTER'S NO. 1979
No. 1572 Session of 2003
INTRODUCED BY GERGELY, COSTA, DIVEN, COLEMAN, FABRIZIO, HARHAI,
KIRKLAND, LEWIS, MAHER, PALLONE, PISTELLA, SCAVELLO, TIGUE
AND TRAVAGLIO, JUNE 10, 2003
REFERRED TO COMMITTEE ON FINANCE, JUNE 10, 2003
AN ACT
1 Providing for prohibition of levy or collection of tax on
2 homestead property, for the Homestead Property Tax
3 Elimination Fund, for imposition of sales and use tax, for
4 increase in personal income tax and for realty transfer tax.
5 The General Assembly of the Commonwealth of Pennsylvania
6 hereby enacts as follows:
7 Section 1. Short title.
8 This act shall be known and may be cited as the Homestead
9 Property Tax Elimination Act.
10 Section 2. Definitions.
11 The following words and phrases when used in this act shall
12 have the meanings given to them in this section unless the
13 context clearly indicates otherwise:
14 "Fund." The Homestead Property Tax Elimination Fund
15 established under section 4.
16 "Homestead property." The owner-occupied, primary residence
17 and the parcel of land within this Commonwealth on which the
18 residence is located and other improvements located on the
1 parcel. If a portion of the structure is used for a
2 nonresidential purpose, the homestead is equal to that portion
3 of the property used as the primary residence of the owner-
4 occupant. The term "homestead" shall have no effect, evidentiary
5 or otherwise, concerning the issue of whether property
6 constitutes a homestead or homestead property under any other
7 act. The term "homestead" shall include the owner-occupied
8 primary residence on a farmstead as defined in 53 Pa.C.S. § 8582
9 (relating to definitions) but shall not include any other real
10 property on a farmstead.
11 "Political subdivision." Any county, city, borough,
12 incorporated town, township, school district, vocational school
13 district and county institution district.
14 Section 3. Property tax prohibition.
15 Notwithstanding any other provision of law to the contrary,
16 no political subdivision may levy or collect any tax on
17 homestead property for any purpose after June 30 of the calendar
18 year immediately following the effective date of this section.
19 Section 4. Homestead Property Tax Elimination Fund.
20 (a) Establishment.--There is hereby established in the State
21 Treasury a special fund to be known as the Homestead Property
22 Tax Elimination Fund.
23 (b) Custodian.--The State Treasurer shall be the custodian
24 of the fund, which shall be subject to the provisions of law
25 applicable to funds listed in section 302 of the act of April 9,
26 1929 (P.L.343, No.176), known as The Fiscal Code.
27 (c) Roles of Department of Revenue and State Treasurer.--
28 Taxes imposed under sections 5, 6 and 7 shall be received by the
29 Department of Revenue and paid to the State Treasurer and, along
30 with interest and penalties and any refunds and credits paid,
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1 shall be credited to the fund no less frequently than quarterly.
2 (d) Interest.--During any period prior to the credit of
3 moneys to the fund, interest earned on moneys received by the
4 Department of Revenue and paid to the State Treasurer under this
5 act shall be deposited into the fund.
6 (e) Money in the fund.--All money in the fund, including,
7 but not limited to, money credited to the fund under this
8 section, prior year encumbrances and interest earned thereon,
9 shall not lapse or be transferred to any other fund but shall
10 remain in the fund and used exclusively as provided in this act.
11 (f) Investment of funds.--Pending disbursement, money
12 received on behalf of or deposited into the fund shall be
13 invested or reinvested as are other funds in the custody of the
14 State Treasurer in the manner provided by law. All earnings
15 received from the investment or deposit of such funds shall be
16 credited to the fund.
17 (g) Borrowing of funds.--The State Treasurer shall be
18 authorized to borrow money from the General Fund in the event
19 the money in the fund is insufficient to make the distribution
20 required under section 8. Such borrowing shall be repaid with
21 interest to the General Fund at the earliest practicable date.
22 (h) Use of funds.--The Department of Revenue and the State
23 Treasurer may use a portion of the revenues in the fund for
24 costs associated with administering this act.
25 Section 5. Sales and use tax.
26 (a) Tangible personal property or services.--In addition to
27 any other tax currently levied by the Commonwealth under Article
28 II of the act of March 4, 1971 (P.L.6, No.2), known as the Tax
29 Reform Code of 1971, there shall be imposed upon each separate
30 sale at retail of tangible personal property or services as
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1 defined in Article II of the Tax Reform Code of 1971 a tax on
2 the purchase price of 1%.
3 (b) Purchases at retail.--In addition to any other tax
4 currently levied by the Commonwealth under Article II of the Tax
5 Reform Code of 1971, there shall be imposed upon the use of
6 tangible personal property purchased at retail and on services
7 purchased at retail as defined in Article II of the Tax Reform
8 Code of 1971, a tax on the purchase price of 1%. The use tax
9 imposed under this subsection shall not be paid over to the
10 Commonwealth by any person who has paid the tax imposed under
11 subsection (a) or has paid the tax imposed under this subsection
12 to the vendor with respect to the use.
13 (c) Exclusions.--All exclusions enumerated under section 204
14 of the Tax Reform Code of 1971 shall apply to the sales and use
15 tax levied under this act.
16 (d) Deposit of revenue.--The revenue generated through the
17 tax levied pursuant to this section shall be deposited into the
18 fund established under section 4 for purposes of replacing
19 revenues lost by all political subdivisions based on the
20 property tax prohibition set forth in section 3.
21 Section 6. Personal income tax.
22 (a) Additional income tax.--In addition to any other tax
23 currently levied by the Commonwealth under Article III of the
24 act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code
25 of 1971, there is hereby levied a tax of 1.55% on each class of
26 income as defined in Article III of the Tax Reform Code of 1971.
27 (b) Poverty provisions.--The special tax provisions for
28 poverty set forth in section 304 of the Tax Reform Code of 1971
29 shall apply to the personal income tax levied pursuant to this
30 section.
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1 (c) Deposit of revenue.--The revenue generated through the
2 tax levied under this section shall be deposited into the fund
3 established under section 4 for purposes of replacing the
4 revenues lost by all political subdivisions based on the
5 property tax prohibition set forth in section 3.
6 Section 7. Realty transfer tax.
7 (a) Real estate tax.--In addition to any other tax currently
8 levied by the Commonwealth under Article XI-C of the act of
9 March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code of
10 1971, every person who makes, executes, delivers, accepts or
11 presents for recording any document or in whose behalf any
12 document is made, executed, delivered, accepted or presented for
13 recording shall be subject to pay for and in respect to the
14 transaction or any part thereof or for or in respect of the
15 vellum parchment or paper upon which such document is written or
16 printed, a State tax at the rate of 2% of the value of the real
17 estate represented by such document, which State tax shall be
18 payable at the earlier of the time the document is presented for
19 recording or within 30 days of acceptance of such document or
20 within 30 days of becoming an acquired company.
21 (b) Article XI-C provisions.--The provisions of Article XI-C
22 of the Tax Reform Code of 1971 shall apply to any tax levied
23 pursuant to this section.
24 (c) Deposit of revenue.--All revenue derived from the
25 collection of the tax imposed under this section shall be
26 deposited into the fund established under section 4 for purposes
27 of replacing revenues lost by all political subdivisions based
28 on the property tax prohibition set forth in section 3.
29 Section 8. Disbursements from fund.
30 (a) Certifications by political subdivisions.--No later than
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1 June 1 of each year, each political subdivision within this
2 Commonwealth shall certify to the Treasury Department the amount
3 of revenue the political subdivision will lose in the upcoming
4 fiscal year based on the property tax prohibition under section
5 3.
6 (b) Duties of Treasury Department.--No later than July 15 of
7 each year, the Treasury Department shall reimburse each
8 political subdivision for the total amount of revenue lost by
9 the political subdivision based on the property tax prohibition
10 under section 3.
11 Section 9. Notice.
12 If a constitutional amendment prohibiting any political
13 subdivision from levying a tax on homestead real property is
14 ratified by the electorate, the Secretary of the Commonwealth
15 shall transmit notice of the ratification to the Legislative
16 Reference Bureau for publication in the Pennsylvania Bulletin.
17 Section 10. Repeals.
18 All acts and parts of acts are repealed insofar as they are
19 inconsistent with this act.
20 Section 11. Effective date.
21 This act shall take effect as follows:
22 (1) The following provisions shall take effect
23 immediately:
24 (i) Section 1.
25 (ii) Section 9.
26 (iii) This section.
27 (2) The remainder of this act shall take effect upon
28 publication of the notice under section 9.
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