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PA Chamber members highly support the recent passage of S.B. 405 from the Senate Appropriations Committee, which would restore clarity and predictability to the business privilege tax.

The BPT has long been assessed on Pennsylvania's business owners for "the privilege of conducting business" within a municipality's borders. This law was fairly easy to understand and follow until 2007, when the Pennsylvania Supreme Court in V.L. Rendina Inc., v. Harrisburg and the Harrisburg School District reversed the opinion that a municipality cannot tax a business lacking a permanent base of operations within its borders. The removal of the language requiring a permanent base of operations blurred the bright-line distinction on when the BPT could be assessed.

This line was blurred even further in 2009, when the A&L Inc v Rostraver Twp. court decision determined that two different standards could be used to double tax the same stream of gross receipts for the BPT. This ambiguity created confusion for businesses, which often don't know when they owe BPT or to whom, and placed even more burdens on job creators with unexpected tax liabilities.

Recognizing that these issues could be resolved through legislation, the PA Chamber, on behalf of its members, issued a memo to the Senate Appropriations Committee urging the passage of Senate Bill 405. The proposal would remedy current BPT confusion by restoring the language of the law as it appeared prior to the 2007 court ruling. It would specify that a BPT may be imposed only if the "privilege" of doing business is exercised through a "base of operations" in the local taxing jurisdiction. Enactment of this proposal would restore fairness for business owners who should not be taxed for merely engaging in transactions outside of their immediate vicinity. It would also clarify language for job creators who have argued that specifying a 'base of operations' would make the law easier to understand and follow.

To emerge from the recession with a vibrant economy, it is critical for Pennsylvania lawmakers to adopt policies that improve the state's business climate. Senate Bill 405 would help to accomplish this by offering a return to language that is both fair and easier to understand for job creators, an important step toward attracting private sector investment in the Commonwealth.

The measure now moves to the full Senate, where it will be considered on the floor in live session.

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Founded in 1916, the Pennsylvania Chamber of Business and Industry is the state's largest broad-based business association, with its membership comprising businesses of all sizes and across all industry sectors. The PA Chamber is The Statewide Voice of Business.