Many perceive proposed state tax reform as ruse to raise taxes

November 19, 1990|By Lynda Robinsonand Eileen Canzian

No one called it dead on arrival. But even supporters of a landmark proposal to restructure Maryland's tax system were pessimistic about its recommendations to increase and expand the sales tax, raise taxes on higher incomes and redistribute millions of dollars to Baltimore and poor, rural counties.

"As a Baltimore City legislator, I will be supportive of reasonable, progressive tax proposals that generate state funds that will help the city and some of the poorer subdivisions," said Delegate Howard P. Rawlings, a Democrat and vice chairman of the House Appropriations Committee.

"But I suspect that my colleagues -- and I hope I'm incorrect -- are going to be very conservative and very reluctant to raise taxes during these economic times," Mr. Rawlings said.

After three years of study and controversy, the Maryland Commission on State Taxes and Tax Structure is ready to recommend sweeping changes in the tax system, including increasing the sales tax from 5 to 5 1/2 percent and expanding the tax to cover cigarettes, auto repairs, cable television service and a wide range of other services.

The commission's proposals would generate an estimated $800 million in tax revenue for education, transportation, the Chesapeake Bay cleanup and other government services and programs.

But few legislators think their constituents are in any mood for tax increases, particularly after watching voters across the state toss incumbents out of office earlier this month in what has been called a frenzy of anti-tax anger.

State Sen. Laurence Levitan, D-Montgomery, who chairs the Budget and Taxation Committee, described the timing as "the worst possible" to consider tax increases and restructuring.

"In a recessionary time, you just don't go into $800 million worth of new initiatives," he said. "I think there's a general consensus in the legislature that we'd like to figure out how to help Baltimore. But I don't think anybody was anticipating an $800 million price tag to do that."

House Minority Leader Ellen R. Sauerbrey, R-Baltimore County, said she views the commission's recommendations as a blatant attempt to raise taxes in the guise of tax reform.

"I don't think we should be looking for new tax revenues," she said. "We should be looking for ways to curtail growth in government spending and to find ways to make state government leaner and more efficient."

But Robert C. Embry Jr., president of the Maryland State Board of Education, called the commission's recommendations "a tremendous step forward" in addressing the educational inequities between Baltimore and Maryland's poorest counties and the rest of the state.

He acknowledged the obstacles facing the recommendations but said they could be enacted if Gov. William Donald Schaefer pushes for passage and if legislative supporters refuse to let it die. "If the people who are for it decide it isn't going to happen, it won't happen," he said.

The commission's chairman, Montgomery County lawyer R. Robert Linowes, insisted last week that the mood of Maryland's taxpayers had been misread. He said he believes Maryland residents are willing to pay more in taxes as long as the money pays for efficient, effective improvement of services.

But Blair Lee IV, a Montgomery County real estate developer, predicted almost universal hostility to the commission's recommendations in his jurisdiction.

Although the commission tried to avoid pitting "have" counties like Montgomery against "have not" jurisdictions like Baltimore, its recommendation to cap the state's contribution to teachers' pension plans and other fringe benefits would hurt Montgomery more than any other local government, Mr. Lee said.

"It's a direct assault on Montgomery County," he said.

The commission didn't emerge as an issue in Anne Arundel County's recent elections, but voters there and elsewhere made it clear they won't tolerate more taxes, said Robert Schaeffer, a Severna Park man who led an unsuccessful fight to cap property tax revenues.

"The legislators -- those with brains -- had to get some message from their constituents," Mr. Schaeffer said. "All over Maryland, people were saying: 'No new taxes.' "

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