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Proposed tax relief bills

Published October 25. 2013 05:00PM

Senate Bill/House Bill 76, also known as the Property Tax Independence Act, sponsored by state Sen. David G. Argall, would eliminate property tax and replace it with increases in sales and use taxes.

The proposal, which is currently in the Senate Finance Committee, would raise the sales tax from 6 percent to 7 percent (an increase of about 16 percent), and the personal income tax from 3.07 percent to 4.34 percent (an increase of about 41 percent).

The result of work by more than 80 private organizations, the bill would levy sales and use taxes for the first time on items that include personal hygiene products, newspapers, magazines, clothing and footwear costing $50 or more, nonprescription drugs, caskets and burial vaults, flags, liquor or malt beverages purchased from a retail dispenser, coin-operated food and beverage vending machines, candy and gum, storage, bad debts, investment metal bullion and investment coins, horses, and textbooks.

Also, dry cleaning and laundry services; personal care services; funeral parlors, crematories, and death care services; spectator sports admissions, except for schools; theater, dance, music and performing arts; amusement and recreation industries; museums, historical sites, zoos and parks; transit and ground, air, truck and other transportation; basic TV; veterinary fees (except business-to-business); waste management and remediation; recreational parks, camps and campgrounds; parking lots and garages.

Services, exempting business-to-business, would also be taxed: legal, (except for domestic relations matters and criminal defense matters); architectural, engineering and related services; accounting, auditing and bookkeeping services.

@Section Head:SENATE BILL 484

Senate Bill 484, also known as the Senior Citizens' Property Tax Freeze Act, sponsored by state Sen. Lisa Boscola, would keep real estate tax levy at current rates for those who are at least 65 years old, have lived in their own homes for at least five years, and have annual incomes below $65,000.

Each senior citizen could claim only one property for the freeze, and may not have any delinquent tax payments.

The state would reimburse the school districts the amount they would lose under the proposal, which would go into effect on Jan. 1, 2014.

Boscola's proposal is supported by senators John Yudichak, and David G. Argall.

@Section Head:HB 1189

House Bill 1189, also known as the Optional Property Tax Elimination Act, sponsored by state Rep. Seth Grove, R-Dover, would allow each school district to decide whether and how to replace its property tax, dollar-for-dollar, with increased earned income and other taxes.

The bill, which was approved by the House on Oct. 2, and is currently in the Senate Finance Committee, would authorize a school district to levy, assess and collect an elimination tax to reduce or eliminate its property tax.

Elimination taxes, according to the bill, are earned income and net profits; a mercantile tax; and a business privilege tax.

The bill would allow school boards to make the decisions with no voter referendum required.

"This legislation will allow a school district to implement an additional earned income tax, mercantile tax or business privilege tax with the additional revenues used solely for the reduction or elimination of school district property taxes," Grove wrote in a March 18 memo to colleagues. "Revenues generated will be used on a dollar-for-dollar basis to reduce the school district millage rate. If revenues are generated to eliminate the property tax (reduce the millage rate to zero), all new tax rates that are implemented under this proposal to reach full elimination will be subject to the Act 1 index."

The Act 1 index is used to determine the maximum tax increases for each tax the school district levies, without voter approval or exceptions from the state Department of Education.

Both the mercantile and business privilege tax would be based on total gross receipts. Generally, businesses that would be subject to a mercantile tax would be subject to a business privilege tax. The mercantile tax would apply to dealers or vendors of wholesale or retail items. The business privilege tax would be levied on all trades, occupations or professions that offer services to the general public.

The bill touts local control of property tax relief efforts, that all revenues stay in the home district, and that it allows for "complete elimination of property tax through local choice."

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