Franklyn E. Conflenti, Charles F. Hodel, Jr., Ivan E. Birsic, David R. Cashman, Cauley, Birsic & Conflenti, Pittsburgh, for appellants.
Craig R. Burgraff, William H. Smith, Deputy Auditor Gen., Melvin R. Shuster, Gerald Gornish, Deputy Attys. Gen., Israel Packel, Atty. Gen., Harrisburg, for appellees.
Jones, C. J., and Eagen, O'Brien, Roberts, Pomeroy, Nix and Manderino, JJ.
In this appeal we are presented with a challenge to the constitutionality of Section 6(b), the so-called forfeiture provision, of the Public Utility Realty Tax Act, Act of March 10, 1970, P.L. 168, No. 66, § 6, 72 P.S. § 3271 et seq. (Supp.1975) [hereinafter PURTA,] in light of Article VIII, Section 4 of the Pennsylvania Constitution of 1968.*fn1 We have concluded that the challenge must fail.
Before addressing the merits of the issue presented, it is necessary to give some of the background of the constitutional provision under consideration and a summary of the taxing scheme embodied in PURTA. Since the case involves the propriety of the sustaining of a demurrer, the salient allegations of the complaint must also be set forth. These background materials are contained in parts I and II of this opinion, respectively. Discussion of the question for decision is in part III.
Prior to the addition of Article VIII, Section 4, supra, note 1, to the Constitution of Pennsylvania*fn2 real property owned by public utilities and essential to their operation was generally exempt from local real estate taxation.*fn3 By the time of the Constitutional Convention of 1967-68 there had arisen concern that this exemption was depriving local taxing authorities of a substantial source of revenue.*fn4 Hence, Article VIII, Section 4, begins with a general abolition of this exemption. At the
same time, however, there was also concern that simply eliminating the tax exemption which public utilities had theretofore enjoyed could produce a windfall for those municipalities within which much public utility realty happens to be situated while providing little or no benefit for other localities.*fn5 To avoid this undesired result, Article VIII, Section 4, also provides that local taxation of public utility realty may be replaced by a gross receipts or other special tax imposed and collected by the Commonwealth and distributed to local taxing authorities in a more equitable manner.
The public utility realty tax was imposed by PURTA as a special tax in place of local taxation of public utility realty.*fn6 That tax is an annual tax of thirty mills upon each dollar of the state taxable value*fn7 of public utility realty. § 3 of PURTA, 72 P.S. § 3273(a) (Supp.1975). Payment of the tax is to be made to the state treasurer by June 1 of each year and is to be accompanied by a report showing the computation of state taxable value upon which that payment is based. § 3 of PURTA, 72 P.S. § 3273. By April 1 of the following year each local taxing authority is to submit to the Department of Revenue a report stating, inter alia, (a) the authority's total tax receipts for the most recent completed fiscal year; ...