Appeal from the Order of the Court of Common Pleas of Lycoming County, in the case of City of Williamsport, Williamsport Area School District v. Sun-Gazette Company, No. 86-00027.
Norman M. Lubin, Casale & Bonner, P.C., for appellant, City of Williamsport.
Nathan W. Stuart, for appellant, Williamsport Area School District.
J. David Smith, McCormick, Reeder, Nichols, Sarno, Bahl & Knecht, for appellee.
Christine Garvey DeLuce, Associate Counsel, for Amicus Curiae, Pennsylvania Newspaper Publishers' Association.
Judges Craig and Palladino, and Senior Judge Barbieri, sitting as a panel of three. Opinion by Judge Palladino.
[ 123 Pa. Commw. Page 336]
The City of Williamsport and Williamsport Area School District (collectively Appellants) appeal from an order of the court of Common Pleas of Lycoming County (trial court), which determined that the income Sun-Gazette Company (Appellee) derived from pre-printed advertising supplements is not subject to business privilege tax. For the reasons set forth below, we affirm.
The following facts are not in dispute: Appellee is in the business of printing and distributing a newspaper. Appellee receives revenue from advertisers who advertise in its newspaper through pre-printed advertising inserts. These advertising inserts are not printed by Appellee but by other printers at the advertiser's expense. Appellee uses special equipment to insert the pre-printed advertising inserts into its newspapers. Several
[ 123 Pa. Commw. Page 337]
employees work exclusively on the task of inserting the inserts. Appellee then distributes the newspapers containing the pre-printed advertising inserts. The pre-printed advertising inserts are never distributed separate and apart from the newspapers into which they are inserted.
Pursuant to The Local Tax Enabling Act (LTEA),*fn1 Appellants, have enacted a business privilege tax ordinance*fn2 and a business privilege tax resolution.*fn3 Appellants seek to impose a business privilege tax on that portion of Appellee's revenues received from pre-printed advertising. However, the business privilege tax ordinance, the business privilege tax resolution and LTEA all prohibit Appellants from levying, assessing or collecting a business privilege tax upon goods that are manufactured or upon any privilege, act or transaction relating to the business of manufacturing.*fn4
Appellants brought a declaratory judgment action seeking a declaration that they could levy, assess, and collect business ...