Md. business groups urge delay in gas-tax debate

Maryland business leaders are urging legislators to delay discussions of increasing the state’s gas tax until next year.

Legislators have said they will strongly re-consider a failed proposal from this year’s General Assembly to raise statewide taxes on gasoline and could do so as soon as this fall, when the assembly meets for its special congressional redistricting session.

While a tax increase has support from several of the state’s Democratic leaders, others have warned that considering it this fall could prove unpopular with residents already paying more than $4 per gallon for gas and could lead to even more taxes during the session.

“There’s more transparency during a regular session than in a special session,” said Kathleen Snyder, CEO of the Maryland Chamber of Commerce.

State officials are pushing for $800 million in new revenue to help pay for road projects and restore the state’s Transportation Trust Fund and could pass a new revenue package as early as this fall.

Maryland charges a 23.5 cents-per-gallon tax on gasoline and has not increased its rate since 1992. Senate Majority Leader Robert J. Garagiola, Montgomery Democrat, proposed a 10-cents-per-gallon increase that failed to gain support this past session.

He and other legislators have said they will likely revisit the proposal and weigh it against others, which include charging a sales tax on gasoline for the first time or increasing the state’s sales tax.

The Chamber of Commerce, which represents 860 businesses and 442,000 employees across the state, favors a gas tax increase to help fund road projects but wants the assembly to wait until January.

“The gas tax is just a short-term fix [and] other revenues must be found to help pay for these costs,” Ms. Snyder said. “But it is one that we should have increased five or 10 years ago.”

Ms. Snyder said she does not want any tax proposals considered during the special session in order to avoid a repeat of the assembly’s last special session in 2007, when legislators passed a surprise computer services tax.

The assembly approved $1.4 billion in new taxes that session to address a $1.7 billion structural deficit, increasing the state sales tax from 5 to 6 percent and passing a 6-percent tax on computer services that caught many business leaders off guard.

Legislators repealed the so-called “tech tax” during their 2008 regular session after heavy lobbying efforts.

Ms. Snyder warned that addressing taxes during this fall’s abbreviated session would limit public input and could result in lawmakers using their votes on the gas tax to leverage support for other taxes on businesses.

While the chamber favors a gas tax increase, the proposal has been criticized by Maryland Business for Responsive Government — an organization that assesses the state’s business climate.

MBRG President Kimberly Burns argued the tax could be especially harmful for delivery businesses and that if legislators pass a tax increase, they need to make sure the money goes directly to transportation.

“There are people who are not connected with transportation who are going to feel the affects of this,” she said. “We think it’s premature to come out in support of it when there aren’t adequate assurances.”

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