For Immediate Release
5/2/08

Contact:

Jason R. Brehouse
jbrehouse@pasen.gov
(717) 787-8927

 

Senate Approves Earll Bill Consolidating Collection of Earned Income Taxes at County Level

Harrisburg – The state Senate has approved legislation sponsored by Sen. Jane Earll (R-49) that would update the Local Tax Enabling Act of 1965 to consolidate the collection of earned income taxes at the county-wide level.  

Currently, the collection of nearly $2 billion in tax revenue is performed by 560 collectors. Senate Bill 1063 would reduce it to 65 county collectors. Allegheny County would be divided into four regional tax collection districts. Philadelphia already has a consolidated tax collection office and is subject to a different body of law. 

Senate Bill 1063 was sent to the House of Representatives for consideration following Wednesday’s 41-8 vote in the Senate.   

“We are trying to bring the collection of Earned Income Taxes into the 21st century. The way we collect taxes now is antiquated, inefficient and results in a lack of withholding, lost revenue and revenue that ultimately does not get distributed to the municipalities where it belongs,” said Earll. “When the legislature enabled the structure that currently exists, it was in a day and age where employees worked predominately in the municipality where they’re being taxed. It was much easier to keep track of who was being taxed, where the withholding was taking place, and the destination where the revenues were being distributed. But that’s not the reality of the current day.” 

Senate Bill 1063 features the following provisions: 

• Establishes uniform withholding, remittance and distribution requirements, and requires taxpayers to declare and pay income taxes.
• Establishes a tax collection committee to keep records and oversee the tax officer for the tax collection district. The tax collection committee shall be subject to the Right to Know Law.
• The tax collector may invest all taxes collected in authorized investments subject to the approval of the tax collection committee.
• Stipulates that a school district located in more than one county shall be included in the tax collection district with the greatest share of the school district’s population.
• Allegheny County would be served by four regional tax collection districts.
• Requires the Legislative Budget and Finance Committee to conduct an audit and evaluation on the impact of consolidated collection.  

“Our archaic structure allowing for individual municipal tax collectors was devised in a day and age that is completely different from current-day reality. It really is necessary to start to streamline and create efficiencies in the way we collect this tax,” said Earll. “This measure was drafted over the course of three years, incorporating recommendations from municipalities, school districts, counties and others. Updating our tax collection process is long overdue. Hopefully, the House and the governor will support this modernization effort.”

Additional Information:
Reform

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