Sales tax for property tax reduction

Harrisburg — Five statewide organizations representing county and local government officials from across the state recently unveiled a plan that would allow them to provide meaningful property tax reduction for residents, as well as relief from the burden of tax-exempt property, through an optional county sales tax. The proposal, announced during a news conference in the state Capitol, would give counties the option of levying a one percent sales tax on the same goods and services subject to the state sales tax. A majority of the proceeds would have to be used for property tax relief, to offset nuisance taxes, and to support projects involving multiple municipalities. “It represents true collaboration among the broad range of municipal governments here in the commonwealth, from our smallest townships and boroughs to our largest cities and counties,” said Butler County Commissioner James Kennedy, president of the County Commissioners Association of Pennsylvania. “It means decreased reliance on the real property tax and relief for the property tax payer. And it includes strong incentives for improving efficiency in the delivery of services, with dedicated funding for collaborative and regional efforts.” Under the proposal, 50 percent of the sales tax proceeds would be returned to the participating county, 40 percent would be distributed to municipalities in that county, and 10 percent would be allocated to a Municipal Collaborative Efforts Fund. The county would be required to use at least 60 percent of its share for property tax relief and to eliminate nuisance taxes. Municipalities would have to use at least 60 percent of their share for property tax relief and/or to offset revenue losses from tax-exempt property. Both counties and municipalities would be restricted to using no more than 40 percent of their sales tax proceeds for general fund purposes, and they could choose to allocate part of that revenue to the Municipal Collaborative Efforts Fund. The optional county sales tax proposal was developed by the County Commissioners Association of Pennsylvania, the Pennsylvania League of Cities and Municipalities, the Pennsylvania State Association of Boroughs, the Pennsylvania State Association of Township Commissioners, and the Pennsylvania State Association of Township Supervisors.