- The Washington Times - Monday, March 22, 2004

ANNAPOLIS — House Democratic leaders yesterday proposed a $670 million plan that would increase the sales tax and raise affluent Marylanders’ income taxes, but would soften the blow by reducing the state property-tax rate.

House Speaker Michael E. Busch said the plan would cost the overwhelming majority of Marylanders less than $100 a year, with people at the lowest income levels getting a tax reduction.

He said the tax package would provide a stable, reliable revenue source to fund education and would go a long way toward solving projected budget deficits.

“I would suggest to you that that’s a better solution than asking Marylanders to gamble $23 billion a year at the racetrack, hoping to make $600 million a year to go to their education fund,” Mr. Busch said, referring to Gov. Robert L. Ehrlich Jr.’s slot-machine bill that has passed the state Senate.

The House plan would:

• Raise the sales tax to 6 percent from 5 percent, bringing in $665 million in new revenue.

• Increase the top income-tax rate for the next five years to 6 percent from 4.75 percent on taxable income of more than $150,000 for individuals and $200,000 on joint returns, producing $210 million in additional taxes.

• Reduce the state property-tax rate, which was increased by Mr. Ehrlich last year, by 8 cents for every $100 of the assessed value of property, saving taxpayers $320 million a year.

• Increase the titling tax on new motor vehicles to 6 percent from 5 percent, producing $145 million in new revenues.

• Reduce income taxes for low-income Marylanders by $30 million.

Mr. Ehrlich, a Republican, said the House plan “is an attempt to replace the slots bill with a sales-tax increase.”

“That’s certainly an approach we reject,” he said, renewing his pledge to veto any bill that would increase sales or income taxes. “Some of these taxes, I believe, are a nonstarter, even in a Democratic-controlled Senate.”

The Senate, which completed work on the budget last week, approved a much smaller tax package, including a $64 million increase in corporate taxes that was proposed by Mr. Ehrlich.

Most of that revenue would remain in the budget, but House leaders plan to eliminate a 5 percent sales tax on snack foods such as chips and pretzels approved by the Senate.

Mr. Busch was surrounded by House Democratic delegates and advocates for education funding as he announced the plan that would put the $665 million in new sales-tax revenues directly into school funding.

The speaker said polls show Marylanders are willing to pay more in taxes if the money goes to public schools and colleges.

“I think if you give them that choice, the choice they would make is a penny on the sales tax,” he said.

The House plan was proposed with just three weeks left in the session, but Mr. Busch said “there is plenty of time” for the plan to make it through the legislature.

House fiscal committees will add the taxes to a bill proposed by the governor and passed by the Senate that includes fee increases, cuts in local government aid and tax increases to keep next year’s budget balanced.

House leaders distributed a chart indicating that the net effect of the tax plan on most families except those in the highest income bracket would be $36 or less a year.

That takes into account savings on property taxes as well as money that Marylanders would save on federal income taxes as a result of deducting the higher income-tax payments.

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