Rain Tax Repeal Under Consideration

Can the state government require local governments to collect certain taxes

Taxes are usually a prominent thought on everyone’s minds this time of year, and they were certainly a major issue in Maryland’s recent gubernatorial election. Governor Hogan criticized his predecessor for creating various new taxes and is now seeking to repeal one.

In 2012, state legislation was passed to meet the requirements of the Federal Clean Water Act to reduce pollutants in the Chesapeake Bay. Often referred to as the “rain tax,” the law mandated that Maryland’s 10 most populous jurisdictions (nine counties and Baltimore City) collect an annual storm water remediation fee.

Governor Hogan believes that local officials should be free to decide how to pay for required programs and seeks to make the fee optional. Some lawmakers assert that a repeal is unnecessary because the law already allows for flexibility. In fact, the counties involved charge differing amounts; some elected not to impose the fee at all. There are critics who find that inconsistency inequitable.

While Governor Hogan’s bill was blocked, there are alternative bills under consideration. There is some bipartisan support for revisiting the controversial tax that charges homeowners and businesses fees to pay for reducing storm water runoff from streets, buildings and parking lots.

Many businesses decry the tax as unfairly burdensome, but others that provide environmental services thrive from it. A major concern is that cleanup projects will not be adequately funded without the tax. Lawmakers insist that localities will be required to earmark funds for storm water mitigation whether they impose the tax or not.

Tax planning is a vital component of running a successful business. The attorneys at Longman & Van Grack have the experience and knowledge needed to effectively advise you. Contact our Bethesda and Rockville, Maryland offices today at (301) 291-5027 to discuss your concerns.