House OKs tax shift

Bill to compute taxes on 100% of property, shrink rates by 60%

Measure passed Senate

Supporters say state can compare rates with others in nation

March 28, 2000|By Thomas W. Waldron | Thomas W. Waldron,SUN STAFF

Moving to simplify Maryland's property tax system, the House of Delegates approved a bill last night to tax land, homes and businesses at their full assessed value rather than at only 40 percent.

The "truth in taxation" measure would not change an individual's property tax burden because it would couple the change in assessments with a 60 percent reduction in local tax rates.

Supporters say the bill serves an important purpose -- showing that Maryland's property taxes are in line with those in neighboring states, a move that could make Maryland a more appealing place to own a home or business.

The Senate narrowly approved a measure identical to the House-passed bill last week, meaning the General Assembly is likely to give final approval to the long-debated proposal before adjourning for the year April 10.

"I think it will allow an accurate comparison of property tax burdens between us and our competing states," said House Speaker Casper R. Taylor Jr., who has pushed for the measure since 1996.

"It doesn't change the amount of the tax one penny, and it puts us in the same posture as practically the entire country," Taylor said.

Advocates for lower property taxes counter that such legislation will lead ultimately to higher taxes for homeowners. With property being taxed at 100 percent of its value, a small tax rate increase would lead to substantial revenue increases, they point out.

"Any increase will carry two and a half times as much punch," said Walter E. Boyd Jr., a Lutherville retiree and vice president of Property Taxpayers United. "We're very disappointed."

Under the bill, local tax rates would be levied on the full value of real property beginning July 1, 2001. The legislation would also require local governments to reduce their property tax rates to 40 percent of their current level.

The District of Columbia, Virginia and 24 other states tax property on its full assessed value, meaning those states' local tax rates are substantially lower than those in Maryland.

The measure won support from the Maryland Chamber of Commerce and the Maryland Association of Realtors, who believe that lower tax rates would increase the appeal of Maryland properties -- even though actual taxes paid will not go down.

Boyd predicted that taxpayers would be startled by the new tax rates once the legislation becomes law. "Nobody knows anything about it," he said. "There's going to be a lot of shocked people."

The House approved the same measure in 1997 and again last year, only to see the bills killed in the Senate -- in part because of widespread criticism fueled by talk radio programs.

This year, a hearing on the bill in the Senate budget committee became heated as property tax opponents accused lawmakers of plotting a back-door tax increase. Some of the opponents' rhetoric turned off the committee, said Sen. Barbara A. Hoffman, the panel's chairwoman.

"The committee members just didn't appreciate being treated that way," said Hoffman, a Baltimore Democrat. "The committee doesn't like being bullied."

The panel approved the measure and sent it last week to the Senate floor, where it was approved by a single vote, 24-23.

The bill would lead to substantially lower property tax rates across Maryland.

In Baltimore City, the current rate is $5.82, which is applied to 40 percent of the property's assessed value. Under the legislation, the rate in Baltimore would be reduced to $2.33. In Baltimore County, this year's rate of $2.85 would go to $1.14.

Baltimore County Executive C. A. Dutch Ruppersberger said the bill is a common-sense way of improving the state's image with businesses.

"It's educating the public about what the true tax rate is," Ruppersberger said. "I see it as an economic development tool."

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