On Oct. 31, 2014, then-Gov. Tom Corbett signed HB 1773 into law, as Act 199. Act 199 represents the most significant reform in decades of Pennsylvania’s financial recovery program, commonly known as the Act 47 program. Among the numerous changes made to the Act 47 program by Act 199 are changes to the taxing powers granted to certain municipalities that enroll in the Act 47 program. The changes give those municipalities that qualify greater flexibility in selecting the taxes they impose, but will not result in additional tax revenue to the municipality when compared to what would have been obtained before the passage of Act 199.
Under the Act 47 program, enrolled municipalities must petition their local court of common pleas for authorization to increase taxes beyond the maximum rates provided by law. Prior to the passage of Act 199, enrolled municipalities only were permitted to increase rates of taxation beyond those provided by law for earned income taxes and property taxes. With the passage of Act 199, certain municipalities have two additional options when petitioning the court for a tax increase: an increase in the local services tax and the imposition of a payroll preparation tax.
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