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WILKES-BARRE — When every dollar counts, the city is counting on landlords to pay the business privilege tax and boost revenues that have been admittedly short due to holes in the collection process.

Not all landlords are paying the tax and the city doesn’t have a good handle on how much it’s owed, acknowledged city administrator Ted Wampole.

“We believe part of the issue is education,” Wampole said Monday. “I talked to a couple of landlords who had no idea.”

Additional revenue could take some of the burden off property owners being asked to pay 30 mills more next year in Mayor Tony George’s proposed $47.9 million balanced budget pending approval by the city council by Dec. 31. Several property owners objected to the increase as onerous at last week’s budget hearing and predicted an increase in abandoned properties and blight, the very same problems the mayor aims to tackle with his budget.

The millage increase to 151.6 mills would bring in $2.35 million in revenue and cost the owner of an $80,000 home – the average cost in the city, according to the mayor – approximately $220 more in property taxes next year.

But Wampole was uncertain how much more the city could budget by doing a better job with the landlords.

The city “has not had a great method to track” gross rental income, Wampole said. Berkheimer, the third party company that collects city taxes, is working to get a handle on it, he said.

In an effort to improve the collection of taxes, the city set up task forces, Wampole said. One possible way to inform more landlords of the business privilege tax is during the biennial rental inspection, he said.

Under the City Code of Ordinances, landlords are subjected to the business privilege tax at a rate of 1½ mills or $1.50 for every $1,000 gross volume of business.

If a landlord has gross revenues of $10,000 a year, the tax owed to the city would be $15, Wampole explained. And, with an estimated 8,000 rental units in the city, the tax would not bring in the same amount as the proposed 30-mill increase, he added.

“If it gets us $80,000, that’s a mill,” he said.

A mill is a $1 tax for every $1,000 of assessed value. Wilkes-Barre has its own assessments and does not use Luzerne County’s assessed values.

The $80,000 figure amounts to 0.16 percent of George’s overall $47.9 million proposed budget. It includes $600,000 in business privilege tax revenues, a number that hasn’t changed since 2014 when Tom Leighton was mayor.

Not all of it is from landlords and instead is made up of “any activity carried on or exercised for gain or profit” that’s not subject to the Mercantile Tax for the sale of goods or merchandise, according to the City Code of Ordinances. The proposed budget includes $1.35 million for the Mercantile Tax, down from $1.5 million for this year.

As of the most recent monthly financial report from Sept. 30, the city collected $540,321 in business privilege tax revenues.

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By Jerry Lynott

[email protected]

Wilkes-Barre’s Business Privilege Tax

What is it? A tax for general revenue purposes on the privilege of doing business in the city.

Who pays? An individual or business, not subject to the Mercantile Tax, engaged in any activity or exercise for gain or profit in the city, including, but not limited to, the performance of services and the rental of personal property and/or real estate.

How much is it? The tax is 1½ mills or $1.50 for every $1,000 of gross revenue.

What is the penalty for not paying? Nonpayment is a summary offense punishable by a fine not to exceed $300, plus the cost of prosecution and/or up to 90 days of imprisonment. Each day of the violation is considered a separate punishable offense.

Reach Jerry Lynott at 570-991-6120 or on Twitter @TLJerryLynott