HARRISBURG – Legislation by State Senator Doug Mastriano (R-33) that would clarify existing tax code regarding borough electric systems recently received approval from the Senate Local Government Committee.
Senate Bill 958 specifies that power supplied to borough electric systems for sale within borough limits is exempt from the state’s Gross Receipts Tax.
Historically, the tax has not been applied, but the Department of Revenue has interpreted the law differently, resulting in Mastriano’s legislation.
“Government overreach is unfortunate, especially when a flawed interpretation like this can impact so many communities across Pennsylvania,” said Mastriano. “My legislation resolves any uncertainties and ambiguities that may exist with the applicability of this tax in boroughs that have these types of electric systems.”
The legislation is supported by the PA State Association of Boroughs, the PA Municipal Electric Association and the PA Municipal League.
There are 35 borough electric systems statewide, including a pair in the 33rd Senate District: the Borough of Chambersburg and Mont Alto.
Mastriano noted if the tax was applied upon borough electric systems, ratepayers and borough taxpayers would face the prospect of carrying the additional burden.
“There is no fiscal impact, because this tax has never been collected before, and it is my understanding that the Governor did not budget for this tax in his proposed fiscal outlook for 2020-2021,” said Mastriano, who worked with the Dept. of Revenue in drafting the legislation.
“After it was brought to my attention that borough electric systems might be subject to a tax they never paid before, quick action was necessary,” said Mastriano. “This legislation states – unequivocally – that this type of transaction is exempt from taxation.”
The Senate Local Government Committee passed the legislation unanimously Wednesday, Feb 5th and the bill advanced to the full Senate for consideration.
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