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MIDDLETOWN TOWNSHIP v. ALVERNO VALLEY FARMS (04/20/87)

decided: April 20, 1987.

MIDDLETOWN TOWNSHIP, APPELLANT
v.
ALVERNO VALLEY FARMS, APPELLEE



Appeal from the Order of the Court of Common Pleas of Delaware County, in case of Commonwealth of Pennsylvania (Brought by Berkheimer Associates, Agent for Middletown Township) v. Alverno Valley Farms, No. S.A. 444-83.

COUNSEL

Robert B. Surrick, Surrick Law Offices, for appellant.

Harry F. Dunn, Jr., Dunn and Miller Law Offices, for appellee.

Loudon L. Campbell, Calkins & Campbell, for Amicus Curiae, Pennsylvania Builders Association.

Judges Colins and Palladino, and Senior Judge Kalish, sitting as a panel of three. Opinion by Senior Judge Kalish. Judge Palladino concurs in the result only.

Author: Kalish

[ 105 Pa. Commw. Page 312]

Appellant, Middletown Township, appeals an order of the Court of Common Pleas of Delaware County which held that a local municipality business privilege tax is not applicable to appellee, Alverno Valley Farms. We reverse the trial court.

[ 105 Pa. Commw. Page 313]

Appellee is a building and construction firm engaged in the business of erecting and constructing new residential dwellings in Middletown Township. A complaint was filed against appellee, and after a hearing on December 5, 1983, appellee was found guilty and fined for failure to pay the local municipality business privilege tax. The trial court reversed, holding that appellee was exempt from the tax. We disagree.

Section 2 of the Local Tax Enabling Act (Act), Act of December 31, 1965, P.L. 1257, as amended, 53 P.S. 6902, delegates to municipalities the power "for general revenue purposes, to levy, assess and collect or provide for the levying, assessment and collection of such taxes as they shall determine on persons, transactions, occupations, privileges, subjects and personal property within the limits of such political subdivisions. . . ."

Section 2(11) of the Act, 53 P.S. § 6902(11), further provides that local authorities shall not have authority to levy, assess or collect a tax on the construction of, or improvement to residential dwellings.

Pursuant to section 2 of the Act, 53 P.S. § 6902, appellant enacted the Middletown Business Privilege Tax Ordinance (Ordinance No. 266). The sole basis for the taxing of builders lies in paragraph 23(A) of the Business Privilege and/or Mercantile Tax Rules and Regulations (local tax) which was enacted pursuant to Ordinance No. 266 and provides, "A contractor . . . engaged in the business of erecting buildings or other major construction work, is required to report as gross receipts all receipts derived from the performance of such contracts." Thus, the tax imposed was measured by gross receipts.

Section 3(c)(2) of Ordinance No. 266 exempts from municipality taxation any "privilege, transaction, subject or occupation" which is now or does hereafter ...


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