Schaefer endorses tax reform but holds off on panel's advice

November 20, 1990|By John W. Frece | John W. Frece,Annapolis Bureau of The Sun

ANNAPOLIS -- Gov. William Donald Schaefer said yesterday that Maryland's tax structure must be changed if the state is to address the problems of its poorest subdivisions, but he declined to say which new recommendations of a blue-ribbon tax study commission he would adopt as his own.

The only thing certain, he said, is that there will be opposition in the General Assembly for whatever portions of the report he recommends.

"I think the main thrust of certain people will be to head it off, beat it, knock it off, don't do anything, delay it, send it for further study, summer study, and all the rest," he said.

"But responsible people aren't going to do that. Responsible people are going to sit down and look at it and say, 'You know, there are certain areas of the state that really need some assistance -- really need some assistance -- and they must get some assistance if they are going to survive.' "

The gubernatorial Commission on State Taxes and Tax Structure is set to recommend broad changes in Maryland's tax system that would raise $800 million in new revenue and redistribute more than a third of that amount to eliminate the financial disparities that have handicapped Baltimore and the state's poorest counties.

Most of the extra money would come from increases in both personal income and sales tax rates, as well as from expanding the sales tax base to include cigarettes and a long list of currently untaxed services. The tax increases would be somewhat offset by a $180 million reduction in property taxes.

"People are never ready for a tax increase," the governor conceded as he commented for the record on the tax commission findings for the first time since they were made public in The Sun on Saturday.

"If we never adjust the taxes, fine, that's OK. But we won't be able to take care of the poorer subdivisions, which should be done. You won't be able to take care of many of the people of the state who are so used to receiving services from us," Mr. Schaefer said.

He said he had not read the report, which is not scheduled for release until the 17-member commission votes on it for the final time Nov. 28. The Sun had obtained a draft final report.

The governor complained that some public officials had declared opposition to the report's findings before even reading it.

"Luckily, most of the people are waiting to see what the report really says, knowing full well that some changes in the tax structure must be made. There isn't any question about that," he said.

But asked if recommendations from the Linowes commission -- so called for its chairman, Montgomery County lawyer R. Robert Linowes -- might appear in the state budget the governor must submit to the legislature in January, Mr. Schaefer replied, "I don't know yet. I honestly don't know."

Mr. Schaefer said some commission proposals, such as broadening the sales tax base, "should have been done in the past. . . . Maybe the opportunity will be there now to make some adjustments in those areas."

He also said a recommended new personal property tax on motor vehicles, if proposed, would not take the place of the state's gasoline tax, but be in addition to it. Mr. Schaefer is expected to propose a gas tax increase to the 1991 General Assembly.

The governor also hinted he might consider a tax on luxury items, something not specifically recommended by the Linowes Commission.

"I haven't thought it through yet, but I guess if you can afford to pay for a $250,000 boat, I guess a small amount of additional money wouldn't hurt," he said.

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