Taylor reconsidering his proposal to tax premiums from HMOs Telecommunications plan still on track, he says

February 04, 1997|By Michael Dresser and Thomas W. Waldron | Michael Dresser and Thomas W. Waldron,SUN STAFF

House Speaker Casper R. Taylor Jr. appears to be cooling toward his earlier proposal to tax health maintenance organization premiums to help pay for a cut in Maryland's personal income tax.

At the same time, he said a proposed increase in telecommunications taxes was still on track.

In an interview last week, the speaker acknowledged that he has been having "second thoughts" about applying the 2 percent premium tax to for-profit HMOs.

"The staff has indicated some consequences that may complicate it," Taylor said. "We're going to handle this in a responsible way. If we have to admit that we've misjudged something or made a mistake, we need to admit it."

The Cumberland Democrat said a proposed overhaul of the state's system of taxing telecommunications services has a much better chance of adoption. That proposal, which would result in a substantial revenue increase for the state, could turn out to be the "linchpin" of an eventual income tax deal, he said.

The change in the telecommunications tax would not pay for the speaker's proposed 10 percent income tax cut by itself. Taylor has said an increase in cigarette taxes -- though not as large as the proposed doubling in Gov. Parris N. Glendening's tax plan -- might be a good way to make up some of the difference.

Taylor did not go so far as to pronounce the HMO tax dead. He is still listed as co-sponsor of the bill that would impose the tax, and at least one of his allies said he expects the legislation to get a full hearing in the House Ways and Means Committee next week.

"I don't know why it'll go away. It's the only fair thing to do," said Del. John Adams Hurson, the House majority leader. The Montgomery County Democrat noted that other health insurers now pay a 2 percent premium, while HMOs do not.

Taylor said one reason for his misgivings is that the tax increase would likely be passed on to the patient. "It gets at the premium, which makes the poor customer get hurt. I don't want to get more regressive," he said.

Ultimately, the reason the health premium tax appears to be in doubt while the telecommunications tax is gaining momentum is that the HMO industry seems poised for a battle while the most powerful players in telecommunications are willing to deal.

Lobbyists for Bell Atlantic Corp. and AT&T Corp. said they could accept an increase in the gross receipts tax they pay on their revenue from telephone service as part of a package that would cut their property taxes.

"We clearly need to update the telecommunications tax structure in Maryland to be current with changes in the industry, and this bill is a significant step in doing that," said Sean Looney, director of government affairs for Bell Atlantic-Maryland.

Local telephone companies and long-distance carriers object to a provision in Maryland's law that taxes the property of utilities at 100 percent of assessed value -- as opposed to 40 percent for other businesses.

Legislation backed by Taylor would eliminate that disparity while increasing the gross receipts from 2 percent to 5 percent in three stages. The gross receipts tax is similar to a sales tax, except that it is imposed on the total revenue collected rather than each individual bill.

The overall revenue increase from the telecommunications tax overhaul has been estimated at $36 million.

Ross L. Baker, AT&T's lobbyist in Maryland, said he and his colleagues had calculated the effect on one colleague's monthly bill, which came to $86.32 for local and long-distance service under the current system.

Baker said the gross receipts tax increase, when fully implemented after three years, would raise that bill $2.48, to $88.80, if all other factors held steady.

Pub Date: 2/04/97

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