SCRANTON, Pa. — A Lackawanna County judge gave the OK on a plan to eliminate Scranton's business privilege and mercantile tax on businesses in the city and replace it with another kind of tax called a payroll prep tax.
The mercantile tax charges a percentage of a businesses' gross revenue, while the payroll tax charges based on how many employees a business has.
The switch was something Scranton Mayor Paige Cognetti campaigned on in 2019, saying the way the tax stands now, keeps businesses from opening in the Electric City.
"It's disproportionate across sectors, some sectors are charged while others aren't. If you're going to have a business tax, it needs to be more equitable across the diversity of your economy," Mayor Cognetti said.
But, then came COVID-19 in 2020, Mayor Cognetti says neither the city nor any of its hard hit businesses can afford a major change in their budgets anytime soon.
The business privilege and mercantile tax account for about $2.5 million in city revenue.
"We also don't want to make a change, while the payroll prep tax is a superior, I believe, more modern tax, relative to the business privilege mercantile, it would be tough, especially given everything going on to put that on businesses right now," added Mayor Cognetti.
It'll be up to a panel of tax experts to decide the fate of the mercantile tax; they meet in public zoom meetings every other Wednesday.