House Speaker Casper R. Taylor Jr. is expected to propose state legislation targeting for-profit health maintenance organizations and telecommunications companies for higher taxes -- part of an effort to pay for his proposal to cut personal income taxes.
The package will not include a plan to reduce Maryland's sales tax rate -- a proposal Taylor floated on the opening day of this year's legislative session.
The speaker is expected to describe plans for the two tax increases at a press briefing this morning, where he will formally unveil his long-discussed plan for cutting the income tax rate by 10 percent over three years.
He declined to discuss the proposals yesterday.
Taylor's proposed taxes on HMOs and telecommunications companies would generate about $110 million annually, money that would help offset the $450 million in revenue lost in the income tax cut, according to Democrats briefed yesterday by Taylor.
His proposals, while ambitious, fall short of his goal of a major overhaul of the state's sales tax structure, something he has pursued over the past year.
Both Taylor and Gov. Parris N. Glendening support cutting the income tax rate from 5 percent to 4.5 percent over the next three years.
Glendening has proposed doubling the state's 36 cents-a-pack cigarette tax to recoup some of the lost revenue. Taylor and other key legislators say they could support only a much smaller cigarette tax increase.
The speaker's proposal for revamping the state's tax structure on telecommunications companies would remove a 2 percent tax on gross receipts and replace it with a 5 percent sales tax on services. The measure would raise an estimated $75 million in new revenue, Democrats said yesterday.
It was unclear last night how it would affect individual phone customers.
The second proposal, which would raise an estimated $35 million, would apply a 2 percent insurance premium tax on for-profit HMOs.
Under current state law, the premiums paid by enrollees in traditional fee-for-service plans are subject to a 2 percent premium tax, while fees paid by the members of HMOs are not.
HMO representatives have asserted that HMOs are not insurance companies and should not be taxed as such. For-profit HMOs do pay corporate income taxes.
"We understand the state's fiscal needs," said Gerard E. Evans, lobbyist for two of the state's largest HMOs. "But let's not kill the goose that laid the golden egg. It's businesses like HMOs that employ thousands of Marylanders."
Evans said a new tax on HMOs would only increase the cost to consumers.
As recently as last week, Taylor said he was considering legislation that would expand the state's 5 percent sales tax to cover one other untaxed service, in addition to HMOs and telecommunications companies. But that third service is not now expected to be singled out by the speaker.
He, in effect, will leave that decision to the Ways and Means Committee, which will merge the bills increasing taxes with Taylor's tax cut bill and send one, omnibus tax bill to the House floor later this session.
Pub Date: 1/24/97
