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Republicans pitch cuts to replace computer tax

January 31, 2008|By ANDREW SCHOTZ

ANNAPOLIS -- House Republicans on Wednesday proposed a series of budget cuts and deferrals in hopes of repealing a controversial state tax on computer services.

During a recent special session, the Maryland General Assembly approved an increase in the state sales tax, to 6 percent from 5 percent, and applying the sales tax to computer services.

The sales tax is expected to generate about $200 million.

Some legislators, mostly Republicans, have called the tax unfair and pushed for its repeal.

Democrats, who dominate both houses of the legislature, have said the tax helped plug a large budget deficit and can't be repealed without a revenue substitute.

In the new GOP plan, the two measures resulting in the largest projected savings were a reduction in an increase of post-employment benefits and a longer phase-in of education funding based on geography.

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Each would save about $38 million, House Republicans figure.

Other measures include cutting 500 vacant positions and cutting an increase in funding for community colleges.

Del. Anthony J. O'Donnell, R-Calvert/St. Mary's, the House minority leader, said the computer services tax was passed "for no good reason" without thinking of the effects.

Del. Christopher B. Shank, R-Washington, the House minority whip, said the tax could hurt tech businesses enough to leave the state.

Later, Del. Michael E. Busch, D-Anne Arundel, the House speaker, told reporters the Republicans' plan lacks long-term revenue solutions.

For example, some vacant state jobs don't have salaries attached to them, he said.

Several bills to repeal the computer services tax have been filed this session, including a few from Democrats.

The tax is scheduled to go into effect July 1.

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