GOP offers alternative to Ehrlich corporate tax increase

March 14, 2003|By Tim Craig | Tim Craig,SUN STAFF

Uncomfortable with Gov. Robert L. Ehrlich Jr.'s suggestions that he might raise corporate income taxes, Republican leaders offered an alternative yesterday that they say will generate almost as much money.

The Senate's minority leader, J. Lowell Stoltzfus, and the state's business leaders devised a plan yesterday to increase corporate filing fees significantly in lieu of closing tax loopholes or raising other business taxes.

"The corporate community has stepped up to the plate and said this is how they can help the state," Stoltzfus said.

The state's annual filing fee is $100. The GOP proposal would establish a graduated scale, increasing with the size of a company's work force.

The scale would set the rate for businesses that employ fewer than five at $250, and would rise as high as $10,000 for companies with more than 2,500 employees - generating an additional $87 million.

Ehrlich told legislative leaders Wednesday that he is considering a corporate tax increase to help balance the budget, along with a more moderate $150 across-the-board increase in filing fees. Combined, the two ideas would produce about $100 million.

The administration - trying to close a new $450 million gap in the budget plan it presented in January - is also exploring a 5-cent increase in the state property tax rate. The state property tax represents only a fraction of the property taxes most homeowners pay.

The Ehrlich administration plans to release its budget revisions today, said budget secretary James C. "Chip" DiPaula, and it will include specific ideas for raising new revenues.

Some GOP lawmakers were furious yesterday after learning Ehrlich was considering raising taxes, arguing it went against his campaign pledge.

"Some within the administration seem to have forgotten who sent us here and why," said Del. Herbert H. McMillan, an Anne Arundel County Republican, in a statement.

The House minority leader, Del. Alfred W. Redmer of Perry Hall, also questioned calls to increase taxes.

House Democratic leaders are considering closing several loopholes - a proposal being resisted by business leaders, who worked with Stoltzfus yesterday to develop the filing-fee plan.

DiPaula said the governor is open to the filing-fees idea. "We are looking at all sorts of revenues," he said.

A House committee is set to vote on its budget plan today and tomorrow, and intends to incorporate Ehrlich's revisions.

Sun staff writer David Nitkin contributed to this article.

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