Tough tax conference

March 27, 1992

It won't be easy resolving the differences in the House and Senate versions of the General Assembly's budget plans. And there is little time to reach a compromise: The constitutional deadline is midnight Monday.

Both chambers passed quarter-billion-dollar tax packages to fortify the general state treasury. The House had the good sense to create a new 6 percent tax bracket for the rich and to ask corporations to pay a bit more to help close the state's $1.2 billion budget gap. The Senate, meanwhile, took the sensible position that beer, wine and liquor taxes -- as well as cigarette taxes -- should be increased substantially.

And in an even more significant move, the Senate approved a substantial expansion of the state's 5 percent sales tax to include repairs (computers, televisions, watches, refrigerators, etc.) and some services (dry cleaning, lawn care, security services, tanning salons and cellular telephones). This is only fair: Extending the sales tax to repairs and services makes the tax more equitable for everyone and more progressive.

Bridging the gap on these items could prove arduous in the two House-Senate conference committees. We would hope that legislators agree on a tax package that is large enough to balance the budget without further cuts, set aside some money in a "rainy day" fund and have enough left over to revive some crucial social-service programs that were cut out earlier this session. These include the Emergency Assistance Program that averts evictions; emergency services for the developmentally disabled; the General Public Assistance Program, and transportation aid for local schools.

As for the House-passed gas-tax increase, we feel strongly that it should be approved by the Senate. The extra nickel per gallon would permit major road and bridge improvements to continue, especially in gridlocked regions of Maryland.

But on the other House initiative, the higher piggyback income tax for local governments, we have mixed feelings. The wealthiest subdivisions come away with huge revenue gains; the poorest subdivisions receive far less. That's not fair. House and Senate conferees ought to make every effort to restore equity to this situation through an enlarged "disparity grant" earmarked for poor subdivisions. Anything less would make this part of the tax-and-spending package unacceptable.

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