PRINTER'S NO. 1121
No. 717 Session of 2005
INTRODUCED BY LOGAN, ORIE, BOSCOLA, COSTA, GORDNER, O'PAKE, MUSTO, PIPPY, FERLO AND KASUNIC, SEPTEMBER 21, 2005
REFERRED TO FINANCE, SEPTEMBER 21, 2005
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 the Property Tax 5 Relief Fund; and making a related repeal. 6 The General Assembly of the Commonwealth of Pennsylvania 7 hereby enacts as follows: 8 Section 1. Short title. 9 This act shall be known and may be cited as the Homestead 10 Property Tax Elimination Act. 11 Section 2. Definitions. 12 The following words and phrases when used in this act shall 13 have the meanings given to them in this section unless the 14 context clearly indicates otherwise: 15 "Fund." The Homestead Property Tax Elimination Fund 16 established under section 4. 17 "Homestead property." The owner-occupied, primary residences 18 and the parcel of land within this Commonwealth on which the 19 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 (a) Levy.--Notwithstanding any other provision of law to the 16 contrary, no political subdivision may levy or collect any tax 17 on homestead property for any purpose after June 30 of the 18 calendar year immediately following the effective date of this 19 section. 20 (b) Collection.--Nothing in this act shall be construed to 21 prohibit a political subdivision from collecting delinquent 22 taxes on homestead property levied in any fiscal year preceding 23 the fiscal year in which the prohibition under subsection (a) 24 applies. 25 Section 4. Homestead Property Tax Elimination Fund. 26 (a) Establishment.--There is hereby established in the 27 Treasury Department a special fund to be known as the Homestead 28 Property Tax Elimination Fund. 29 (b) Custodian.--The State Treasurer shall be the custodian 30 of the fund, which shall be subject to the provisions of law 20050S0717B1121 - 2 -
1 applicable to funds listed in section 302 of the act of April 9, 2 1929 (P.L.343, No.176), known as The Fiscal Code. 3 (c) Roles of Department of Revenue and State Treasurer.-- 4 Taxes imposed under sections 5 and 6 shall be received by the 5 Department of Revenue and paid to the State Treasurer and, along 6 with interest and penalties and any refunds and credits paid, 7 shall be credited to the fund no less frequently than quarterly. 8 (d) Interest.--During any period prior to the credit of 9 moneys to the fund, interest earned on moneys received by the 10 Department of Revenue and paid to the State Treasurer under this 11 act shall be deposited into the fund. 12 (e) Money in the fund.--All money in the fund, including, 13 but not limited to, money credited to the fund under this 14 section, prior year encumbrances and interest earned thereon 15 shall not lapse or be transferred to any other fund but shall 16 remain in the fund and used exclusively as provided in this act. 17 (f) Investment of funds.--Pending disbursement, money 18 received on behalf of or deposited into the fund shall be 19 invested or reinvested as are other funds in the custody of the 20 State Treasurer in the manner provided by law. All earnings 21 received from the investment or deposit of such funds shall be 22 credited to the fund. 23 (g) Borrowing of funds.--The State Treasurer shall be 24 authorized to borrow money from the General Fund in the event 25 the money in the fund is insufficient to make the distribution 26 required under section 8. Such borrowing shall be repaid with 27 interest to the General Fund at the earliest practicable date. 28 (h) Use of funds.--The Department of Revenue and the State 29 Treasurer may use a portion of the revenues in the fund for 30 costs associated with administering this act. 20050S0717B1121 - 3 -
1 Section 5. Sales and use tax. 2 (a) Tangible personal property or services.--In addition to 3 any other tax currently levied by the Commonwealth under Article 4 II of the act of March 4, 1971 (P.L.6, No.2), known as the Tax 5 Reform Code of 1971, there shall be imposed upon each separate 6 sale at retail of tangible personal property or services as 7 defined in Article II of the Tax Reform Code of 1971 a tax on 8 the purchase price of 2%. 9 (b) Purchases at retail.--In addition to any other tax 10 currently levied by the Commonwealth under Article II of the Tax 11 Reform Code of 1971, there shall be imposed upon the use of 12 tangible personal property purchased at retail and on services 13 purchased at retail as defined in Article II of the Tax Reform 14 Code of 1971, a tax on the purchase price of 2%. The use tax 15 imposed under this subsection shall not be paid over to the 16 Commonwealth by any person who has paid the tax imposed under 17 subsection (a) or has paid the tax imposed under this subsection 18 to the vendor with respect to the use. 19 (c) Exclusions.--All exclusions enumerated under section 204 20 of the Tax Reform Code of 1971 shall apply to the sales and use 21 tax levied under this act. 22 (d) Deposit of revenue.--The revenue generated through the 23 tax levied pursuant to this section shall be deposited into the 24 fund established under section 4 for purposes of replacing 25 revenues lost by all political subdivisions based on the 26 property tax prohibition set forth in section 3. 27 Section 6. Personal income tax. 28 (a) Additional income tax.--In addition to any other tax 29 currently levied by the Commonwealth under Article III of the 30 act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform Code 20050S0717B1121 - 4 -
1 of 1971, there is hereby levied a tax of 1% on each class of 2 income as defined in Article III of the Tax Reform Code of 1971. 3 (b) Poverty provisions.--The special tax provisions for 4 poverty set forth in section 304 of the Tax Reform Code of 1971 5 shall apply to the personal income tax levied pursuant to this 6 section. 7 (c) Deposit of revenue.--The revenue generated through the 8 tax levied under this section and through the increase in the 9 rate of tax levied on personal income under section 302 of the 10 Tax Reform Code of 1971, from 2.8% to 3.07% shall be deposited 11 into the fund established under section 4 for purposes of 12 replacing the revenues lost by all political subdivisions based 13 on the property tax prohibition set forth in section 3. 14 Section 7. Slot machine gaming revenue. 15 Annually, all revenue deposited in the Property Tax Relief 16 Fund pursuant to 4 Pa.C.S. § 1409 (relating to Property Tax 17 Relief Fund) shall be transferred to the fund for purposes of 18 replacing revenue lost by all political subdivisions based on 19 the property tax prohibition set forth in section 3. 20 Section 8. Disbursements from fund. 21 (a) Certifications by political subdivisions.--No later than 22 June 30, 2006, each political subdivision shall calculate the 23 amount of revenue the political subdivision will lose in the 24 upcoming fiscal year based on the homestead property tax 25 prohibition under section 3 and certify the amount to the State 26 Treasurer. The calculation shall be based on the homestead 27 property tax collections for the 2005-2006 fiscal year. 28 (b) Duties of State Treasurer.-- 29 (1) Each year the State Treasurer shall adjust the 30 calculation originally certified under subsection (a) by the 20050S0717B1121 - 5 -
1 percentage change in the Statewide average weekly wage as 2 calculated by the Department of Labor and Industry under 3 section 404(e)(2) of the act of December 5, 1936 (2nd 4 Sp.Sess., 1937 P.L.2897, No.1), known as the Unemployment 5 Compensation Law. 6 (2) No later than July 15 of each year, the Treasury 7 Department shall reimburse each political subdivision for the 8 total amount of revenue lost by the political subdivision 9 based on the property tax prohibition under section 3. 10 Section 9. Notice. 11 If a constitutional amendment prohibiting any political 12 subdivision from levying a tax on homestead real property is 13 ratified by the electorate, the Secretary of the Commonwealth 14 shall transmit notice of the ratification to the Legislative 15 Reference Bureau for publication in the Pennsylvania Bulletin. 16 Section 19. Repeals. 17 (a) Specific.--Repeals are as follows: 18 (1) The General Assembly declares that the repeal under 19 paragraph (2) is necessary to effectuate section 3. 20 (2) The act of July 5, 2004 (P.L.654, No.72), known as 21 the Homeowner Tax Relief Act, is repealed. 22 (b) Inconsistent.--All acts and parts of acts are repealed 23 insofar as they are inconsistent with this act. 24 Section 20. Effective date. 25 This act shall take effect as follows: 26 (1) The following provisions shall take effect 27 immediately: 28 (i) Section 1. 29 (ii) Section 9. 30 (iii) This section. 20050S0717B1121 - 6 -
1 (2) The remainder of this act shall take effect upon 2 publication of the notice under section 9. H29L72VDL/20050S0717B1121 - 7 -