Thursday, June 14, 2007
State Resolves $52 Calamity
Since granting local governments the ability to increase the $10 occupational privilege tax to $52 and renaming the tax the Emergency and Municipal Services Tax, the state legislature, after several tries, approved four major changes to the tax that will become effective if the Governor signs S218:
• The tax will be withheld in the amount of $1 per week and remitted to the municipality by the employer on a quarterly basis
• The tax will exempt those making less that $12,000 in a year (they can apply for an exemption annually)
• The tax will be renamed the Local Services Tax
• At least 25 percent of the revenue must be used for emergency services
Recall that a bill containing most of these features passed previously but was vetoed by the Governor since he felt that local budgets had already been prepared and the uncertainty from changing the tax late in the year would have been too much of a hardship for those localities. “The timeline is not reasonable” were the words of the Governor in the veto message. The Governor noted that if the taxpayer protections were submitted to him with “reasonable time periods for implementation”, then he would sign it into law.
Gone in this bill is a provision that would have allowed the City of Pittsburgh a “grace period” to keep collecting the tax in one $52 lump until 2010. That language is omitted, and it appears as though the City will have to abide by the collection method and the exemptions. This could cost the City about $6 million in revenue (based on changes they made to their 2006 budget when it looked like they would be subject to the statute).
This is a win for “the little guys” that have seen a big chunk of their first paycheck of the year gobbled up by the tax.
• The tax will be withheld in the amount of $1 per week and remitted to the municipality by the employer on a quarterly basis
• The tax will exempt those making less that $12,000 in a year (they can apply for an exemption annually)
• The tax will be renamed the Local Services Tax
• At least 25 percent of the revenue must be used for emergency services
Recall that a bill containing most of these features passed previously but was vetoed by the Governor since he felt that local budgets had already been prepared and the uncertainty from changing the tax late in the year would have been too much of a hardship for those localities. “The timeline is not reasonable” were the words of the Governor in the veto message. The Governor noted that if the taxpayer protections were submitted to him with “reasonable time periods for implementation”, then he would sign it into law.
Gone in this bill is a provision that would have allowed the City of Pittsburgh a “grace period” to keep collecting the tax in one $52 lump until 2010. That language is omitted, and it appears as though the City will have to abide by the collection method and the exemptions. This could cost the City about $6 million in revenue (based on changes they made to their 2006 budget when it looked like they would be subject to the statute).
This is a win for “the little guys” that have seen a big chunk of their first paycheck of the year gobbled up by the tax.
