Section 4: Estimated Revenue Generation

Taking each of the revenue elements into account, and consolidating them into each of the Options, the revenue each is estimated to generate for the Township is :

• Option 1 – Taking into account both aspects of this option, the total new revenue is estimated to be $4.8 million, comprised of $3.6 million in receipts from real property taxes and $1.2 million from solid waste fee adjustments (in the form of an increase in subscription fees and/or imposition of a rear yard collection fee).
• Option 2 – Comprised totally of real property tax increases, this option is estimated to produce $4.6 million in additional revenue.
• Option 3 – The EIT/NPT option, this alternative is expected to produce $7.1 million in 2004 and $10.1 million upon full implementation in 2005 ($10.9 after indexing for inflation), without taking any associated tax reductions into account. Were $3 million in tax reductions to be enacted, the amount of “net” new revenue would fall accordingly.

A noteworthy point is the amount of EIT/NPT revenue that currently is being paid by Lower Merion Township residents to other municipalities which the Township has a right to receive should it enact an EIT/NPT. Based on the assumption of an EIT/NPT of .5% being enacted by the Township, even a conservative estimate concludes that over $1.5 million is now being paid by Lower Merion residents to other jurisdictions (other than the City of Philadelphia) which could be received by the Township. Such amounts would pay for services in the Township or reductions in taxes paid by Township citizens.

This report does not address the costs of collection of the EIT/NPT or other considerations related to the collection process. As noted above, there are several approaches being taken to effect the collection of the tax in other jurisdictions. Contracted collection costs could approximate 2% of collections ($218,000 of estimated after-inflation remittances for the first full year of the tax). Economies of scale which would drive a possible joinder with other municipalities would drive the cost to each participant.

Further study of the collection issue is a critical element in the Township’s further analysis of the implications of imposing such a tax, and should be undertaken immediately. There are financial and non-financial issues which should be considered, such as the comparative cost of using Township staff, administrative control, accountability, and availability of data.

Return to the Table of Contents