Credit: Chris English/NewtownPANow.com
Newtown Township officials feel that changes are needed in the Sterling Act that authorizes the Philadelphia wage tax.
The township’s board of supervisors approved a resolution to that effect at Wednesday night’s meeting. It calls for up to 1 percent of the 3.45 percent non-resident wage tax paid to the city by township residents who work there to be remitted back to Newtown Township. The resolution is similar to ones being considered by townships and boroughs across the area, and mirrors the provisions of legislation proposed by local Republican State Senator Frank Farry that was recently passed by the state Senate.
The Sterling Act, enacted in 1932 and originally intended to be in effect for only one year according to the resolution approved in Newtown Township, has become outdated and by extension unfair, the document stated.
“In 1932, the act made sense because residents in the adjacent counties visited the city on a regular basis to shop, dine and avail themselves of businesses and services not available in the adjacent counties,” the resolution read. “The Sterling Act, unlike the Local Tax Enabling Act, does not require Philadelphia to remit any portion of its EIT (earned income tax) revenue to the municipality in which the non-resident taxpayer resides, even though the non-residents’s home municipality has enacted its own EIT.”
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Newtown Township has a 1 percent earned income tax that it splits evenly with the Council Rock School District.
“Newtown Township residents who do not work in the City of Philadelphia bear a higher tax burden to support local services because of the inequities caused by the provisions of the Sterling Act,” the resolution continued. “As of tax year 2021, the inequities created by the Sterling Act deprived Newtown Township of annual EIT revenue in the amount of $363,387 that could not be used to provide essential local government services including police, fire and emergency medical services.”
The document goes on to state that the Newtown Township supervisors “hereby formally request that the governor of the Commonwealth of Pennsylvania and the senators and representatives of the General Assembly of Pennsylvania amend the Sterling Act and require that an amount of up to 1 percent of the earned income paid by non-residents to the City of Philadelphia, and collected under the requirements of the Philadelphia wage tax, be remitted to the municipality in which the taxpayer resides if that municipality has enacted an earned income tax.”
