Read their lips: More new taxes proposed

January 09, 1992|By David Conn | David Conn,Annapolis Bureau of The Sun

ANNAPOLIS -- The proposed tax package making the rounds in Annapolis includes across-the-board increases in both income and sales taxes that would affect nearly every consumer and business in the state.

But the $623.4 million plan advanced by Sen. Laurence Levitan, D-Montgomery, the chairman of the Senate Budget and Taxation Committee, also includes more modest proposals that nonetheless would hit certain industries, and their customers, harder than others.

Telephone companies, auto repair shops and insurance companies are among those targeted for new taxes. And some subtle changes in the tax law would raise small amounts from all businesses that collect sales tax.

Predictably, business groups are opposed to any new taxes. "Right now, we still say there needs to be a closer look at the expenditures," before new revenues can be considered, said Ernie Kent, a lobbyist with the Maryland Chamber of Commerce.

Most prominent among the proposed new taxes is a suggestion to apply the sales tax to the labor costs for automobile and appliance repairs.

If the sales tax were raised to 6 percent, as Mr. Levitan proposes, the new taxes would raise $46 million from appliance repairs and $95 million from auto repairs.

Auto dealers say motorists would be hurt by the change. "We're not going to pay it, it's going to be the consumers that'll pay it," said Joseph P. Carroll, executive vice president of the Maryland New Car and Truck Dealers Association.

The proposed tax package also includes a 5-cent-per-gallon gasoline tax, Mr. Carroll pointed out. "It just seems that the motorist is getting hit pretty hard."

Less focused is a plan to raise $9 million by changing the way sales taxes are collected. One change would require businesses to submit the sales taxes they collect by the 15th ofeach month, instead of the 21st.

"It would advance by six days the cash flow" to the state, said Marvin Bond, a spokesman for the state comptroller's office. The interest on that six-day float each month would add up to $1.5 million in the fiscal year that ends in June 1993.

In addition, the Levitan plan would cut in half the discount that companies receive for paying their taxes on time. By cutting the discount to 0.6 percent from 1.2 percent for companies that pay more than $5,000 in sales taxes a month, the state would raise another $7.5 million next year.

Local telecommunications companies would take an $11.8 million hit under the Levitan plan, about three-quarters of it from a tax on cellular phone services and the rest from the application of the sales tax to optional "custom-calling" services, such as call waiting and call forwarding.

Peter B. White, Chesapeake & Potomac Telephone Co.'s government relations director, warned that a tax on those services could threaten the phone company's ability to keep basic rates stable.

Finally, changes in taxes on long-distance telephone carriers and insurance companies would bring in an additional $8.9 million. The telephone revenue would come from changing the way long-distance calls are taxed, and the rest of the funds would come from taxing the sale of property insurance by some domestic companies and by collecting premium taxes four times a year instead of twice.

Major changes

Major legislative proposals and the amount each would raise for the state:

'Tax auto repairs $95 million

Tax appliance repairs $46 million

Tax telephone services,

such as call forwarding $11.8 million

Halve discounts for companies that

who pay sales taxes on time $7.5 million

Require companies to pay

sales taxes six days earlier $1.5 million

Tax on property insurance $1.2 million

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