Pennsylvania Act 2002-96 — OPTIONAL OCCUPATION TAX ELIMINATION ACT - AMEND EARNED INCOME TAX LIMITS AND OCCUPATION TAX PROHIBITION

Act text

OPTIONAL OCCUPATION TAX ELIMINATION ACT - AMEND EARNED INCOME TAX LIMITS
                      AND OCCUPATION TAX PROHIBITION
                  Act of Jun. 29, 2002, P.L. 642, No. 96              Cl. 53
                             Session of 2002
                               No. 2002-96

     HB 2126

                                  AN ACT

     Amending the act of June 22, 2001 (P.L.374, No.24), entitled "An
        act providing for optional occupation tax replacement; and
        making a repeal," further providing for the definitions of
        "governing body" and "political subdivision," for earned
        income tax limits and for certain prohibition of occupation
        tax; and making an editorial correction.

        The General Assembly of the Commonwealth of Pennsylvania
     hereby enacts as follows:

        Section 1.  The title of the act of June 22, 2001 (P.L.374,
     No.24), known as the Optional Occupation Tax Elimination Act, is
     amended to read:
                                  AN ACT
     Providing for optional occupation tax replacement[; and making a
        repeal].
        Section 2.  The definitions of "governing body" and
     "political subdivision" in section 2 of the act are amended to
     read:
      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:
        * * *
        "Governing body."  A city council, borough council,
     incorporated town council, board of township commissioners,
     board of township supervisors, a governing council of a home
     rule municipality or optional plan municipality, a governing
     council of any similar general purpose unit of government which
     may hereafter be created by statute or a board of school
     directors of a school district.
        * * *
        "Political subdivision."  Any city, borough, incorporated
     town, township or school district.
        * * *
        Section 3.  Sections 4 and 5 of the act are amended to read:
      Section 4.  Earned income tax rate limits.
        (a)  Earned income tax rate limits.--For the first fiscal
     year beginning after approval of the referendum under section 7
     and each fiscal year thereafter, the governing body of a
     political subdivision using the procedures authorized by this
     act shall be authorized to impose the earned income tax at a
     rate not exceeding the maximum earned income tax rate as
     calculated under subsection (b).
        (b)  Calculation of maximum earned income tax rate.--The
     maximum earned income tax rate shall be determined by taking the
     sum of the rates calculated under paragraphs (1) and (2) and
     limited by paragraph (3):
            (1)  The rate of the earned income tax that would have
        resulted in the collection by the political subdivision of an
        amount equal to the amount collected from the occupation tax.
        [This] The calculation by a school district under this
        paragraph shall be made using actual revenue collections for
        the fiscal year ending [immediately prior to the date of the
        referendum under section 7.] in 2002. The calculation by a
        municipality under this paragraph shall be made using actual
        revenue collections for the calendar year ending December 31,
        2001.
            (2)  The rate at which the earned income tax was
        collected by [the political subdivision] a school district
        for the fiscal year ending [immediately prior to the date of
        the referendum under section 7.] in 2002 or the rate at which
        the earned income tax was collected by a municipality for the
        calendar year ending December 31, 2001.
            (3)  The tax rate determined under paragraphs (1) and (2)
        shall be rounded off to the nearest increment of [five
        hundredths of one percent] ten hundredths of one percent.
     The maximum rate of the earned income tax calculated under this
     subsection shall not be subject to the limits on the earned
     income tax specified in section 8(3) of The Local Tax Enabling
     Act.
        (c)  Other rates of taxation.--If a municipality or school
     district, both of which impose an earned income tax on the same
     individual under The Local Tax Enabling Act and both of which
     are limited to or have agreed upon a division of the tax rate in
     accordance with section 8(3) of The Local Tax Enabling Act, and
     the municipality or school district receives voter approval
     under section 7 and opts to increase the rate of earned income
     tax in excess of that limit or agreement, then the municipality
     or school district which does not receive voter approval shall
     remain subject to that limit or agreement.
      Section 5.  Occupation tax prohibited.
        (a)  General rule.--For the first fiscal year beginning after
     approval of the referendum required under section 7 and each
     fiscal year thereafter, a political subdivision is prohibited
     from levying, assessing or collecting an occupation tax.
        (b)  Occupation assessment tax roll.--In a county where no
     political subdivision levies the tax, the county shall not be
     required under the provisions of this or another statute to
     maintain the occupation assessment tax roll.
        (c)  Applicability.--This section shall not apply to the
     collection of delinquent occupation taxes.
        Section 4.  This act shall apply to political subdivisions
     that levied an occupation tax on January 1, 2002.
        Section 5.  This act shall take effect immediately.

     APPROVED--The 29th day of June, A. D. 2002.

     MARK S. SCHWEIKER