WILKES-BARRE — With recent talk about enacting a commuter tax in Scranton, workers in Wilkes-Barre should not worry.
According to Gerald Cross, executive director of the Pennsylvania Economy League Central Division, state law prohibits municipalities from reaching beyond their borders to capture a commuter tax on non-residents.
Cross said the law is specific, allowing municipalities to levy no more than 1 percent. He said towns already have an earned income tax, and even though residents work in another municipality, they get credit for what they pay in the town where they reside.
“If a city like Wilkes-Barre is looking for an alternative source to generate revenue, this is not an option,” Cross said. “State law protects non-residents from being taxed twice.”
In Scranton’s case, special circumstances prevail. Cross said Act 47 — the Distressed Municipalities Act — would allow Scranton to add the tax.
The state has legally classified Scranton as a “distressed” since 1992 because of it is unable to meet its financial obligations.
A consultant has recommended a number of ways for Scranton to increase revenue, including enacting a .75 percent tax on wages of those who work in the city but live elsewhere.
However, Cross said a municipality would have to meet the criteria to be classified as distressed, and then the governing body would have to pass an ordinance.
He said there are three distressed municipalities in Luzerne County — Nanticoke, Plymouth Township and West Hazleton — but none levies commuter taxes.
“If a town’s pension system (for employees) is so distressed and needs extra funding, it can raise the earned income tax on residents and non-residents,” Cross said. “But the town would have to meet all the required criteria.”