Gerald Cross of the PA Economy League says paying tax collectors commission is a rip-off, and local governments should switch to paying them salary.
Municipalities and school districts only get the opportunity to change how they compensate tax collectors once every 4 years, so you need to do this before February 15, 2013 or else you have to wait until 2017.
Under the commission method, tax collectors receive a percentage of the bill. Thus, the more tax owed, the more the tax collector receives. An increase in the assessed valuation of a property or in the millage rate produces increased commissions, but the tax collector workload remains the same. Also, large tax bills generate large commissions, yet they are no more expensive to handle than small ones. In contrast, not only are salary and per-bill compensation more logical and more in keeping with the work performed, they tend to be less costly as well.
A PEL 2003 study of boroughs and townships in 12 central and eastern Pennsylvania counties found that the 267 municipalities that used commission-based pay spent 2.81 percent of the taxes collected for the service. Tax collectors earning a per-bill fee received 1.06 percent of the taxes collected, while those working on salary made 0.79 percent of taxes collected.
As a result, those municipalities paying commission had an average cost of compensation that was almost three-fourths higher than the overall average and about 31/2 times higher than the average for those that paid a salary.
Regardless of the method used, governing bodies must act now to reduce costs by changing compensation methods, capping commissions, lowering per-bill fees and salaries or freezing compensation at current levels, among other options. School districts in particular have been successful at shrinking costs, but over the years many other jurisdictions have saved hundreds of thousands of dollars individually by altering payment methods.