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Task force targeting loopholes

August 02, 2007|By JOSHUA BOWMAN

HAGERSTOWN - Washington County's Excise Tax Task Force began the crux of its work Wednesday, meeting to discuss loopholes in the county's residential excise tax.

While the meeting was short on action, the group came to an informal consensus on one issue that, if approved, would broaden the tax's impact on new construction and make it harder for some builders to avoid paying the tax.

"We started tonight with a freeflowing session, but I think we've come to a consensus that this tax needs to be more applicable," Task Force Chairman John Schnebly said.

The current residential excise tax applies only to new "dwelling units," which are defined in the tax ordinance as units with a bathroom, kitchen and sleeping area. Many members of the task force agreed Wednesday that the tax should be expanded to apply to all new residential construction.

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Washington County Permits Department Director Daniel F. DiVito said the county loses "a lot" of revenue each year when people build additions to their homes that do not include full kitchens or bathrooms.

"We call this the 'mother-in-law suite.' These are basically dwelling units without stoves," DiVito said.

The group agreed that the county should be able to collect excise taxes in such situations and will likely vote on the matter next week, Schnebly said.

The task force was created to recommend changes to the current excise tax by Sept. 30.

The tax, which goes largely toward new school construction, brought in $11.5 million less than budget projections in fiscal year 2007 because of a housing slowdown, Washington County Budget and Finance Director Debra Murray said. In addition, loopholes and other aspects of the tax structure have made the excise tax less effective than it could be and unfair to some home builders, according to county officials.

The task force also discussed Wednesday the tax's current flat-fee, which some members said should be changed to a more progressive structure. The tax is $15,500 for multi-family homes and $13,000 for single-family homes. Homes less than 1,500 square feet are charged $1 per square foot.

"You have the same fee being charged on a 2,000 square foot house as on a 5,000 square foot house," said Del. LeRoy E. Myers, Jr. (R-Washington/Allegany), who is the Washington County Delegation's representative on the task force. "It's unfair."

Task force members on Wednesday discussed ways to link the tax rate to a home's size, including creating tax bands and setting a fixed rate per square foot.

The task force meets every Wednesday at 5 p.m. in the Washington County Administrative Annex building at 80 W. Baltimore St. Their next meeting is Aug. 8.

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