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Hearing set on proposal for Washington County excise tax

June 04, 2008|By JOSHUA BOWMAN

WASHINGTON COUNTY - A public hearing on proposed changes to Washington County's excise tax will be June 17 at 4 p.m.

The hearing, which was scheduled Tuesday by the County Commissioners, must be held before the county may rewrite its excise tax ordinance.

The current tax structure expires June 30.

Excise tax is levied on new construction and currently is charged as a flat rate for residential buildings. The rate is based on square footage for nonresidential construction.

The tax is meant to offset certain costs of development.

Last year, the county received permission from the Maryland General Assembly to change its excise tax ordinance, which some people have said is unfair because the rate for residential construction is not based on the size of the home.

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The tax is $15,500 for multi-family homes and $13,000 for single-family homes, regardless of size.

Some county staff members also have complained that the current nonresidential tax structure, which classifies construction into one of five categories, is easy for developers to manipulate. The also have said the tax contains too many exemptions.

In response to these complaints, the commissioners recommended setting a square footage rate for residential construction and reducing the number of categories for nonresidential construction.

In October 2007, the commissioners suggested a $3-per-square-foot tax rate for all residential construction. They also suggested two categories for nonresidential construction, retail and nonretail, with retail paying $3 per square foot and nonretail paying $1 per square foot.

In March, the Washington County Delegation to the Maryland General Assembly, which has authority over county tax legislation, decided to cap those rates at $4.50 for residential, $4 for nonresidential retail and $1.50 for nonresidential nonretail.

The county commissioners' recommended rates will be the ones that are adopted July 1, though the caps give them the freedom to raise or lower the tax without the delegation's approval, which the commissioners have said will allow them to react to changing economic conditions.

In fiscal year 2007, the county collected $3.8 million in excise tax revenue-roughly $11.5 million below budget projections.

Washington County Director of Budget and Finance Debra S. Murray has said the shortfall was primarily due to the downturn in the housing market.

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