With Maryland facing a $1.2 billion budget hole next year, the time has come to end tax breaks for ski mountains, country clubs and purchasers of bulk gold and platinum, says a group that has scoured the state tax code for loopholes.
Progressive Maryland, an alliance of labor unions, faith-based organizations and community groups, said yesterday it has identified 52 tax exceptions that primarily benefit corporations and the wealthy. Their elimination would generate at least $421 million for the state budget, meaning vital services to children and seniors could be spared cuts, the report concludes.
"There are a lot of different ways to balance the budget," said Sean Dobson of Progressive Maryland, an author of the study. "It doesn't have to be on the backs of working families. We need to make sure millionaires are paying their fair share of taxes."
Dobson called on Gov.-elect Robert L. Ehrlich Jr. to support legislation that would end the breaks, saying Ehrlich campaigned on a platform that included more funding for public schools and no cuts in aid to local governments or public safety.
"We're going to find out just how big his heart really is," Dobson said.
Ehrlich spokesman Paul E. Schurick said he reviewed the list and found no exceptions that need altering. He called Progressive Maryland a "pro-tax organization."
"Over the years, the legislature felt that using the tax code for incentives is good public policy," Schurick said. "To paint these with a broad brush and say they're all bad and must go is naive and simplistic."
Ehrlich has not yet released his plan for balancing the budget next year, when officials say anticipated spending will outstrip revenue by $1.2 billion. By law, the General Assembly must pass a balanced budget, so some combination of program cuts, transfers, borrowing, reserves and tax increases is needed to fill the gap.
Ehrlich's 2004 budget plan is expected to rely heavily on new revenue from slot machines.
The largest break identified by the group is a sales tax exemption on raw materials purchased by manufacturers for production purposes, valued at $117.4 million yearly.
But Michael Galiazzo, executive director of the Regional Manufacturing Institute, said it's wrong to call the exception a loophole. Maryland was one of only two states that taxed manufacturing materials before the law was changed, he said.
Others tax loopholes identified in the study include:
A $650,000 break on property taxes for country clubs and golf courses.
An $8,000 reduction on the utility bill for snowmaking at Garrett County's Wisp ski resort.
A $59 million exemption on jet fuel sold to airlines.
Steve Hill, head of the Maryland Budget and Tax Policy Institute, said corporations can afford to pay higher taxes.
"Most people don't realize we have one of the most favorable business tax environments in the country," Hill said. "It's so easy for corporations to avoid paying taxes."
Progressive Maryland charged that many of the breaks are written into law because of cozy relationships between lawmakers and corporate interests fueled by campaign contributions and nurtured by lobbyists.
"If the general public understood this, we'd be hearing about it," said Del. Elizabeth Bobo, a Howard County Democrat. "This is not an exhaustive list, but it's a very good tool for the legislature to work with."