Md. reaps more in tax revenues

August 04, 1994|By Patricia Horn | Patricia Horn,Sun Staff Writer

After four years of putting off buying that new sofa or replacing that vacuum cleaner, Marylanders are shopping again, sending state sales tax revenues to their biggest year-to-year increase since 1990.

Sales of homebuilding materials and home-related goods propelled Maryland's sales and use tax revenue nearly 5.6 percent higher in the last fiscal year, the Maryland Comptroller's Office announced yesterday. And during the last month of the fiscal year, June, the revenue rose 7.2 percent over the same month last year, the largest rise of any month.

Sales and use tax revenue climbed to $1.8 billion in fiscal 1994, nearly $8.7 million higher than the state had estimated.

"The growth in sales and use tax revenue was broad based, covering every category and fueled largely by consumer confidence based on an improving employment picture of Maryland and by the lower interest rates that spurred purchases of homes and other major items," State Comptroller Louis L. Goldstein said.

Sales and use taxes are the state's second-largest form of revenue, after income taxes. A use tax is paid on goods brought into the state for use here, such as products bought through the mail.

A University of Baltimore economist said he's not surprised by the steady improvement during the past year, although others might be.

"I think that people have been too pessimistic about Maryland's economy for a long time," said Anirban Basu of the university's Regional Economics Studies Program.

The comptroller's office has not yet broken down spending by category for fiscal 1994, but according to spokesman Marvin A. Bond, the strongest growth in sales tax revenue for the first 11 months of the year came from utility sales (up 15 percent); builders and contractors (up 7.75 percent percent); furniture, fixtures and appliances (up 7 percent); and hardware, machinery and equipment (up 6 percent.)

Each new home purchased and occupied in Maryland generates $3,000 to $5,000 in sales taxes because of the taxes paid by contractors on building materials and homebuyers on major home items, such as washers and dryers, according to the Comptroller's Office.

"The sectors of Maryland economy that have been best performers for us are those that are interest-rate sensitive," Mr. Basu said. Those include residential construction, durable-good retail sales, mortgage banking and related services, and insurance. "All these industries have recovered nicely and led Maryland's economy back."

Mr. Basu said he expects the growth in those industries to slow because of this year's interest rate increases by the Federal Reserve, but expansion in other sectors should make up for that. "Light manufacturing, commercial construction, the port and related industries, transportation have already begun to recover strongly. While interest rates will slow other growth, these sectors will pick up the slack, especially as economies in Europe continue to grow."

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.