Companies call electricity tax illegal


Five Baltimore County companies charged yesterday that the county has been illegally collecting taxes on their electricity bills -- raising the specter that the government might have to refund several million dollars to area businesses.

The five companies -- A.M.G. Resources, Blue Circle Atlantic, Eastern Stainless Steel, Genstar and House of Seagrams -- had already won agreement from the Maryland Tax Court that a portion of the 7.5 percent tax on their electricity bills shouldn't have been collected.

And yesterday, the companies' attorney, Robert Bair, asked the Baltimore County Circuit Court to throw out the county government's appeal of the refund order.

Mr. Bair said the companies were owed a total $866,758 for taxes they shouldn't have been charged from 1986 through 1988, and that they would also file for refunds for 1989, 1990 and 1991, bringing the total refund due to about $1.5 million.

If the companies win their case, Mr. Bair said, many area businesses -- including some in other jurisdictions with similar statutes -- might demand refunds from their local governments.

"Baltimore City has a tax statute similar to this," Mr. Bair said, adding that dozens of big electricity users around the state are watching and waiting to see how this case turns out.

"Everybody is riding our coattails," he said.

But attorneys for Baltimore County argued yesterday that the tax is legal and that loss of the money would hit the government especially hard in the midst of a recession.

At issue is the tax the county levies on industrial users of electricity.

Mr. Bair said the county taxes companies on the electricity they use but that the county has been charging its 7.5 percent tax on each business' total Baltimore Gas and Electric Co. power bill.

The bills, however, include charges that don't reflect the actual amount of power used, he said.

Besides charges per kilowatt-hour, the bills include "demand" and "customer" charges, which are fees for big users and for hookups, he said. "These are hardly consumption charges," Mr. Bair said.

The companies want the county to eliminate those two charges from the tax, which would cut some companies' tax bills by about a third.

If Circuit Judge Robert E. Cahill rules in favor of the companies, Mr. Bair said, he expects the county to appeal because of the chance that many area businesses might also demand refunds.

County officials said yesterday that the tax court misinterpreted the law and that a victory is important to the county.

Jim Gibson, director of finance for the county, said the regional government expects to collect nearly $14 million, or 2 percent of its budget, from the electricity tax this year, and that loss of even a fraction of the money "would be a serious matter."

And Stanley Shapiro, the deputy county attorney overseeing the county's attempt to keep the tax, argued that it is fair for the county to tax the total electricity bill, since the "demand" and "customer" charges reflect BG&E;'s costs of delivering electricity to industrial customers.

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