Special interests line up to oppose tax increases Lobbyists ready battle proposals

January 10, 1992|By Timothy J. Mullaney

While business lobbyists were still trying to sort out Gov. William Donald Schaefer's tax proposals late yesterday, many of his ideas will have to overcome the determined opposition of industry interests to pass.

Trucking interests oppose raising the gasoline tax, cable television operators say they don't want their customers paying sales tax, and small-business lobbyists are skeptical about raising personal income taxes on upper-income taxpayers.

The governor proposed boosting the corporate income tax to 7.5 percent from 7 percent, studying the idea of making the personal income tax more progressive, raising a wide range of so-called "sin taxes" on tobacco and liquor, boosting the gasoline tax by a nickel a gallon, and extending the 5 percent sales tax to a number of services.

The sales tax now applies to many goods, but virtually all services are exempted.

"I've got my work cut out for me," said Bruce Bereano, a lobbyist for interests that include tobacco and cable TV companies. "I knew it was going to be a difficult session and I didn't think it could go up any notches, but it has."

Lobbyists for professional services were left pondering what the governor meant by a one-sentence reference in his State of the State address. Mr. Schaefer said that "we also need to look at [sales taxes on] professional services."

Aides to the governor said he does not intend to tax such services as architecture, engineering and medicine. But Frederick W. Puddester, deputy secretary of the Department of Budget and Fiscal Planning, said the governor would listen to legislative proposals to tax those professions.

"As we develop the package with the General Assembly, if they want to include others, he is willing to talk about it," Mr. Puddester said.

Imposing sales taxes on services has been a hot potato for state governments since Florida was forced to repeal a broad sales tax on services early in the administration of former Gov. Robert Martinez, who served from 1987 to 1991.

Lobbyists say they don't expect the legislature to push too hard for taxing lawyers, doctors and accountants. But if the idea does arise, one lobbyist said, it will face stiff opposition.

"We were very alarmed he mentioned professional services," said Maxine Adler, a lobbyist for the Maryland Society of the American Institute of Architects. "It's just another way to put a sales tax on people.

"It should be done directly [by raising the 5 percent rate] if the money is needed."

Governor Schaefer mentioned only a handful of services on which he would like to impose a sales tax, including dry cleaning, data processing, barbershops and beauty parlors, car phones and cable television. Mr. Puddester said the governor chose those because they were used by higher-income people more often than by the poor.

But Mr. Bereano said cable viewers are taxed enough. "They're heavily taxed at the local level," he said.

Officials of the Greater Washington Board of Trade, a broad-based business lobby that is active in the Maryland suburbs, said they wanted to study the governor's remarks before commenting.

Officials at the Greater Baltimore Committee and Maryland Chamber of Commerce didn't return phone calls.

VTC But James P. Goeden, a lobbyist for the National Federation of Independent Business, said small businesses are willing to pay the higher corporate income tax.

But the federation's members are concerned about taxes being imposed on services, Mr. Goeden said, because small businesses buy a lot of services from outside vendors that bigger competitors could perform in-house, allowing the bigger companies to escape the tax.

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