Advertisement

Revising the excise tax

July 20, 2007

A task force set up to review Washington County's excise tax might eliminate "loopholes and safe havens" that exempt certain types of construction from the tax.

John Schnebly, the panel's chairman, said this week that some of those exemptions, which include additions, farm construction and elderly and work-force housing, are being abused.

If a developer is designating a development as senior-citizen housing, but doesn't really enforce age restrictions for residents, that shouldn't be allowed.

However, if a homeowner builds an addition to house an elderly parent, it doesn't seem right to penalize him or her for being a caring son or daughter. Keep the exemption, but require that the tax be paid if it becomes a rental property later.

Advertisement

The task force was set up under a law that took effect July 1. That law also allows the commissioners to temporarily lift the ceiling on the tax.

Right now, the county charges a $13,000 fee for single-family homes in developments with 25 or fewer homes. Multifamily homes are charged $15,500 per unit, with fees doubling if the subdivision exceeds 25 units.

The tax was based on square footage until two years ago, when it was changed to a flat fee, except for homes of less than 1,500 square feet, for which the fee is now $1 a square foot.

That exemption, plus a slowdown in home sales, led to an $11 million shortfall for the current fiscal year.

Because contracts had already been awarded for projects that depended on that money, the commissioners were forced to take $5.2 million from the FY 2006 surplus.

Washington County Delegation Chairman LeRoy Myers, R-Washington/Allegany, who will serve on the task force, said last month that the tax structure has not taken "a real close look at young couples who grew up here and want to stay here."

No doubt some members of the task force will argue that the fee makes new homes unaffordable for such couples.

But as we said earlier this month, there is no guarantee that eliminating the fee will lead to construction of more affordable homes.

Eliminating it or reducing it would place the burden of building schools, roads and other infrastructure on existing taxpayers.

Reducing the rate substantially might also require an increased growth rate to cover those costs, at a time when there's an argument to be made that Washington County isn't ready for the growth it's experiencing now.

The Herald-Mail Articles
|
|
|