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MUNNELL APPEAL (09/21/71)

decided: September 21, 1971.

MUNNELL APPEAL


Appeal from order of Court of Common Pleas, Civil Division, of Allegheny County, April T., 1970, No. 9, in re appeal of Jeffrey C. Munnell; George R. Reetz, t/a Reetz Typewriter Shop; and Eger Motors, Inc. v. City of McKeesport.

COUNSEL

John G. Kish, with him T. Robert Brennan, and Brennan and Brennan, for appellants.

Ines W. Cordisco, for appellee.

Wright, P. J., Watkins, Montgomery, Jacobs, Hoffman, Spaulding, and Cercone, JJ. Opinion by Jacobs, J. Cercone, J., concurs in the result.

Author: Jacobs

[ 219 Pa. Super. Page 526]

In 1969, the City of McKeesport, a third-class city, passed an ordinance providing for a Business Privilege Tax. This ordinance was enacted pursuant to the taxing authority given to third-class cities by The Local Tax Enabling Act, Act of December 31, 1965, P. L. 1257, 53 P.S. § 6901 et seq.

The ordinance imposes a six-mill tax on the privilege of doing business in McKeesport and is measured by the gross receipts of the business. Business is defined as "carrying on or exercising whether for gain or profit or otherwise within the City of McKeesport any trade, business . . . profession, vocation, service, construction, communication or commercial activity, making sales to persons or rendering services from or attributable to a McKeesport office or place of business." Due to the broad definition of "business", this tax affects corporations, partnerships, and individuals. Certain exemptions from the tax are provided, the most important of which are: (1) an exemption for any business which is already subject to the McKeesport Mercantile Tax, and (2) an exemption for any business from which the power to tax is withheld by law.

Appellants, 33 individuals and 10 corporations, appealed the adoption of the tax to the court below as provided by section 6 of The Local Tax Enabling Act. That court affirmed the validity of the tax and this appeal followed.

[ 219 Pa. Super. Page 527]

In support of their argument that the tax is invalid, appellants contend: (1) that The Local Tax Enabling Act is an act of limitation and, therefore, since a business privilege tax is not specifically authorized by the Act, such a tax is not permitted; (2) that the tax is unconstitutional because it lacks uniformity; (3) that the tax is unconstitutional because the ordinance establishing the tax authorized an improper delegation of authority to a tax commissioner; (4) that the tax is invalid when applied to the corporate-appellants since such a tax violates section 2(3)*fn1 and section 3*fn2 of The Local Tax Enabling Act; (5) that the tax is invalid as to the individual-appellants because it duplicates other taxes which they must pay; and (6) that the tax is unconstitutional because it imposes an unreasonable burden and restricts free trade.

The Supreme Court of Pennsylvania recently held the Pittsburgh Business Privilege Tax to be valid in F. J. Busse Company v. Pittsburgh, 443 Pa. 349, 279 A.2d 14 (1971). The Pittsburgh tax is almost identical to the tax which is challenged in the instant case. In upholding the validity of the Pittsburgh tax, the Court held that: (1) The Local Tax Enabling Act does authorize a city to impose a business privilege tax; (2) the tax is uniform since the taxpayers did not meet their burden of proving that the taxing classifications were unreasonable; (3) the taxing statute did not authorize an unlawful delegation of taxing authority; and (4) the tax is not invalid under sections 2(3) and 3

[ 219 Pa. Super. Page 528]

    of The Local Tax Enabling Act. Busse is obviously controlling as to the first four contentions of appellants in the instant case; therefore, the McKeesport tax cannot be ...


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