Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Officials Worry Taxation Bill Could Hurt Local Budgets

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

Officials Worry Taxation Bill Could Hurt Local Budgets

Article excerpt

A bill nearing final approval in the state Legislature is designed to prevent businesses from paying the same tax twice.

But some local officials say the bill also would prevent them from charging the business privilege tax to contractors and others that set up temporary businesses in local communities.

The Pennsylvania Chamber of Business and Industry supports Senate Bill 405, arguing that a business should have a "permanent base of operations" in a municipality for it to be subjected to the business privilege tax.

But local elected officials say as it is written the bill could knock their budgets out of balance because it would apply retroactively to Dec. 31, 2011. They also say businesses rarely pay the tax at both their main location and temporary sites.

Rep. Nick Kotik, D-Robinson, said no public hearings were held to explore the legislation's potential effect when it was introduced, adding that the Legislature shouldn't move the bill before exploring the "different dimensions" of the problems it could cause.

"We shouldn't do business that way," he said.

McKeesport Mayor Mike Cherepko said levying the business privilege tax on two large construction projects in the city would bring in more than half a million dollars over the next two years. The tax is millage charged against gross receipts -- the total business revenue from services provided, before deducting expenses - - and varies by community.

"It's a privilege to do business in our community," he said. "Our residents ... are inconvenienced with traffic and the large trucks and the dirt."

He said the city's roads take a beating from trucks and machinery during construction projects, and the business privilege tax helps offset the cost of those damages.

Mr. Cherepko and Braddock council President Tina Doose spoke with state legislators during the Allegheny League of Municipalities spring conference at Seven Springs March 30-April 1. Both said representatives and senators seemed to be unaware of how the bill would impact municipalities that levy the tax.

Mr. Cherepko said some legislators were under the impression the bill would prevent companies from paying the tax twice -- once in the municipality where they are based and again in the town where they're doing construction work.

That was never the case. "These construction companies were never paying taxes" where they were based, Mr. Cherepko said.

Because many taxing bodies have already accounted for the tax in this year's budget, there has been discussion about moving the effective date to Jan. 1 or June 30, 2013 -- the latter to accommodate school districts.

In Butler Township, where the business privilege tax generated $1.21 million last year, between $65,000 to $75,000 came from "temporary" businesses. Manager Edward Kirkwood said the township has never imposed a business privilege tax on "temporary" businesses that are already paying the tax in the municipality where their business is based.

"That is a double hit, and that is unfair," he said. …

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