HARRISBURG – Legislation by State Senator Doug Mastriano (R-33) that would clarify existing tax code on borough electric systems was amended into a local government measure that passed the Senate on Wednesday.
As a result of the amendment, House Bill 1036 – legislation by State Rep Dan Moul (R-91) – now includes language that clarifies the tax exemption status for borough electric systems.
Mastriano’s proposal originates from Senate Bill 958, and specifies that power supplied to borough electric systems for sale within borough limits is exempt from the state’s Gross Receipts Tax.
“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 legislation returns to the House for concurrence.
Historically, the tax has not been applied, but the Department of Revenue has interpreted the law differently, resulting in Mastriano’s legislation.
The legislation is supported by the PA State Association of Boroughs, the PA Municipal Electric Association and the PA Municipal League.
“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.”
There are 35 borough electric systems statewide, including a pair in the 33rd Senate District: the Borough of Chambersburg and Mont Alto. Mastriano worked with the Dept. of Revenue in drafting the legislation.