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County, state officials debate excise tax issue

April 05, 2006|by TAMELA BAKER

ANNAPOLIS

County officials and the Washington County Delegation to the Maryland General Assembly are at odds again on how to revise the enabling legislation that allows the county to charge excise taxes on new development.

Revisions last year kept a bill to change the method of calculating the tax in limbo until the final moments of the legislative session. This year, the bill seeks authority for the county to exempt certain businesses from the tax. The tangle is over exempting existing businesses that want to expand.

The latest snag came in the form of a letter from county attorney Richard Douglas to the chairman of the Senate Budget and Taxation Committee that said the county wanted to exclude retail businesses from a tax exemption for established businesses.

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Delegation Chairman Christopher B. Shank, R-Washington, said delegation members wouldn't agree to that.

Since county officials approached the delegation about exempting new businesses, Del. LeRoy E. Myers, R-Washington/Allegany, has contended that such a policy punishes existing businesses and discourages them from expanding. The delegation agreed to permitting exemptions to encourage new business on the condition that expanding businesses be exempted as well - unless the expansion would double the size of existing facilities.

Last week, County Administrator Rodney M. Shoop wrote to the Senate Budget and Taxation Committee with concerns about the bill, which had been approved by the House.

The letter said the exemption for existing businesses limited the county's ability to charge the tax, and that the bill's "current language allows for a nonresidential building to expand via phased construction without being subject to the tax."

Shank recommended limiting the exemption to expansions of 50,000 square feet or less, and county officials agreed. Shank presented the amended bill Monday.

On Tuesday, Douglas wrote to ask that retail businesses be excluded completely, "for the reason that retail operations generate greater traffic and burdens on the infrastructure and tend to pay lower wages than other types of nonresidential construction."

But Shank said leaving retailers out would penalize small "mom and pop" operations that wanted to expand. He noted that the county already charges excise taxes at a higher rate on retail business than other commercial development, charging $3 to $4 per square foot as opposed to 20 cents to $3 per square foot for other businesses.

House bill 1407

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