Reply to tax plan: howls and shrugs

October 02, 1990|By Joel McCord Susan Schoenberger, Deborah Greene, S. M. Khalid and Michael J. Clark of The Sun's metropolitan staff contributed to this article.

It's a catastrophe. It's something we have to do. It's really no big deal.

It's a federal deficit reduction plan that increases taxes on gasoline, alcohol, tobacco and high-income families, puts new taxes on luxury items and puts a crimp in health-care coverage for the elderly. It has brought the predictable howls of protest from those who would pay the freight if

the proposals pass Congress and shrugs of indifference from others.

"My rights are being violated," stormed Marsha E. Reed, a sales clerk at Hecht's in Harford Mall. "If I pay more taxes on this cigarette, I'm going to smoke it where I want."

"It's outrageous," groused Ron Coleman, an 18-year-old steel worker from Joppa. "We used to get gas a few months ago for a dollar or 99 cents; now it's up to $1.29. It's too

high for me. I might have to car-pool with somebody."

"It all depends on whose ox is being gored," chuckled Matt McConnell Jr., who was buying 15 cases of champagne at Mills Wine and Spirits in Annapolis before heading home to Coshocton, Ohio, where liquor prices are considerably higher. "But we're in a crisis, and people are just going to have to make sacrifices."

But that doesn't mean they're happy about it.

Hillard Donner, who owns Mills, fears that the sharp increase in tax on wine, which makes up 80 percent of his sales, will drive some customers away, at least for a while.

The increases in taxes on beer and distilled spirits are "not so earth-shattering," he said from behind a counter that held petitions against a jump in beer taxes. "But from 3 cents to 24 cents on a bottle of wine, that's going to hurt."

The folks at the Bykota Senior Center in Towson fear that a $6 increase in the monthly premiums they pay for Medicare coverage of doctor's expenses would do more than pinch the purses of the elderly.

"The last time the government came out with catastrophic [an in

surance plan], they were going to charge us more, but at least there was some promise of benefits," complained Joseph H. Metzger, 68.

Neither Mr. Metzger nor his friends at the center had any problem with increased taxes on alcohol, cigarettes, fuels or luxury items because the costs are absorbed by those who make those purchases.

"It doesn't make me a bit of difference that the guy who buys a $150,000 boat has to pay more taxes," he said.

Those in the marine trades saw the proposal to put a 10 percent tax on yachts that cost more than $100,000 a little differently, however.

"It's not going to generate the revenue the government expects," predicted Arthur Burr, owner of Burr Yacht Sales in Edgewater. "It's going to be a net revenue loser."

A yacht owner thinking of trading up from his $300,000 boat to one costing $400,000 sees that as a $100,000 investment, he explained. But when you combine Maryland's 5 percent excise tax on the purchase price with the proposed federal tax, "that's a tax of $60,000 on what he sees as a $100,000 deal."

Yet the threat of that tax increase could stimulate sales in the short run, suggested Ray Nichols, head of Banking Services, which finances yacht purchases.

"It could boost sales because people will try to get in before the tax takes effect," he said. "But long term, it will have a debilitating effect."

Some suggest that 10 percent luxury taxes won't even dent sales of big-ticket items -- such as cars costing more than $30,000.

"People in the upper-income brackets will still purchase them because I don't think $3,000 will make or break them," said Lee Bonin, general sales manager at Russel BMW.

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