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Md. lawmakers agree on tax rise Negotiators hammer out $89.2 million tax package.


Maryland lawmakers today reached agreement on an $89.2 " million package of tax increases for the upcoming fiscal year that would help the state through its fiscal crisis and pump about $9 million in additional aid to Baltimore.

The measures would hit cigarette smokers with about 10 cents more per pack in taxes, and eliminate the state's unique capital gains tax break. Diners may also feel the pinch in higher tabs at delicatessen-type carryout restaurants, and for sit-down meals costing less than $1.

Negotiators met today and formally agreed to recommend the package to the full House and Senate. The agreement was reached in behind-the-scenes talks this week.

"It is a compromise on everybody's side; everybody has looked long and hard at this thing," said Sen. Laurence Levitan, D-Montgomery, chairman of the Senate Budget and Taxation Committee.

After both houses approve the agreement, which combines elements of rival tax packages passed by the Senate and House, it still must be approved by Gov. William Donald Schaefer. But the plan directs money at some of the causes the governor had recently been publicizing -- and blaming the legislature for not funding.

Welfare recipients would be spared a cutback in benefits that Schaefer had threatened. The extra money is to come from a series of transfers and from the early implementation of the higher food and cigarette taxes.

In fiscal 1992, which begins July 1, Baltimore is to receive $9

million. An extra $5 million would be targeted for aid to the disabled.

Altogether, the plan calls for $5.8 million in extra taxes in the final month of fiscal 1991, to stave off the welfare cuts, and $89.2 million for fiscal 1992.

Both chambers of the General Assembly had agreed to about $75 million in additional taxes, but the joint committee working out the differences in the two packages went beyond that.

Specifically, the new taxes are:

*An additional 3 cents-a-pack tax on cigarettes, on top of the current 13-cent excise tax. Also, cigarettes and other tobacco products for the first time would be subject to the state's 5 percent sales tax.

*Carryout meals and prepared food costing less than $1 also would become subject to the 5 percent sales tax.

Decades ago, lawmakers excluded from taxation meals costing less than $1 in an effort to make more affordable the "working man's lunch." Carry-out meals also were spared from taxation, though the law was amended to exclude carry-out orders from fast-food restaurants that have seating areas.

The food and cigarette taxes would go into effect June 1, raising an estimated $5.8 million in the final month of the current fiscal year. In fiscal 1992, the food tax would raise an estimated $10.2 million, the cigarette tax about $47 million.

*A phaseout of the state's capital gains tax break, culminating in its elimination by Jan. 1, 1992. Prior to that, taxpayers with incomes of $50,000, or $100,000 for joint filers, would be entitled to exclude from taxation 30 percent of the first $25,000 in capital gains -- generally the profit made on the sale of stock or real estate.

Wealthier taxpayers would have a right to exclude lesser amounts of capital gains income and would lose the exemption altogether as of July 1.

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