Wednesday, April 2, 2008

Tech tax repeal clears Senate panel

Bill replaces controversial levy with tax on millionaires

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ANNAPOLIS - Efforts to repeal the controversial sales tax on computer services cleared a key hurdle on Wednesday, as a plan to replace the projected $200 million in revenue from the levy passed the Senate Budget and Taxation Committee and will head to the full chamber as early as Thursday.

The panel voted 10-5 to accept a plan that would create a new income tax bracket on Marylanders who earn more than $1 million, transfer $50 million from the Transportation Trust Fund to the general fund and direct the Board of Public Works to approve another $50 million in budget cuts by July 1.

Several Montgomery County senators resisted the plan because it would disproportionately affect their constituents. Sen. Rona E. Kramer (D-Dist. 14) of Olney said at least 41 percent of the state's millionaires live in the county.

The committee rejected a proposal by Sen. Richard S. Madaleno Jr. (D-Dist. 18) of Kensington that would have removed the income tax hike and simply taken $150 million out of the Transportation Trust Fund.

Senate President Thomas V. Mike Miller Jr., who initially opposed the repeal, said it is likely to pass the full chamber.

‘‘We have a good sense of where the votes are, and I think a sufficient number of senators are going to vote to make this become reality,” he said.

The tax, which would take effect July 1, was approved during the November special session to help close the state's $1.5 billion structural deficit, but technology executives have mobilized for its repeal during the legislative session, saying it would cripples Maryland's computer services industry.