Do you remember this big NO button on my post last month titled Consumer Tax on Real Estate Services? No Way!? I reported that Maryland's Governor Martin O'Malley had called a special legislative session to railroad through several tax increases without the usual citizen safeguards in place during a regular session - including a tax on property management fees.
Unfortunately, the Governor's strategy was effective in increasing the sales tax 20% from 5% to 6% and returning slots to Maryland for the first time since 1968, when they were outlawed.
Maryland Realtors were very effective in opposing several other bills, however, so our "NO" was heard!
Following are excerpts from the Maryland Association of Realtors (MAR) press release, after the final vote on November 19, with a few editorial comments added by me. (Photo on the right is the Maryland State House)
1. TAX ON SERVICES: The proposed tax on real estate property management services was removed from the final bill. This is considered a huge victory because the tax was seen as a "trial balloon" for a far-reaching tax-on-services bill, ultimately taxing consumers on ALL real estate commissions and fees.
2. GREEN FUND: Real estate was removed as a funding source for the Chesapeake Bay 2010 Trust Fund, which would have imposed an annual fee on residential and commercial property. Instead, the General Assembly approved general fund appropriations, and dedicated revenue from the motor fuel tax and rental car tax as the funding sources.
3. MARYLAND RESIDENT REAL ESTATE WITHHOLDING TAX: MAR successfully opposed legislation before the Senate Budget and Taxation Committee that would have created a Maryland Resident Real Estate Withholding Tax, subjecting all Maryland residents to a 4.75% withholding tax when net proceeds of sale exceed $250,000 or $500,000, based on the seller's tax filing status.
4. CHANGE OR RESIDENCY FROM 6 MONTHS TO 3 MONTHS: A bill introduced in the Senate would have required a nonresident of Maryland to file Maryland taxes if that person resided in Maryland for more than 3 months (in order to capture revenue from "snowbirds" who live in low-tax states like Florida yet keep Maryland property). The House did not include a similar provision in its version of the Tax Reform Act, and the provision was removed from the final bill.
5. CONTROLLING INTERESTS: The Tax Reform Act did include "controlling interests" legislation which levies real estate recordation and transfer taxes on the transfer of a "controlling interest" in a real property. However, an amendment supported by MAR delayed the effective date until July 1, 2008 - after the regular legislative session, January-April, Hopefully, this will be overturned then.
Maryland Realtors can be very proud of their effectiveness in dealing with the Governor's strategy of calling a special session to avoid accountability. We did a pretty good job for ourselves and on behalf of Maryland property owners. Congratulations to our State Legislative Committee and lobbyists, and many thanks to all who attended the REALTOR rally on November 1.
Source of Information: Maryland Association of REALTORS
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We just defeated the tax on services bill, we have great MAR lobbyist in Lansing. However, they did pass it for most of the service industries, plumbers, barbers, hair-stylists, etc....
Now that has been over-turned. It's bad enough we have to pay our own health care, but ours was a 6% tax on all services, can you imagine what that would do to realtors etc.
David and Lisa - It looks like our RPAC dollars were a good investment for Maryland, this year, doesn't it! I don't always see it, but this year I do.
Katerina - Thanks, it is important to follow these things. I know consumers have absolutely no idea how much REALTORS contribute to their lives, beyond the real estate services we provide. If not for MAR's efforts, these additional taxes on Maryland consumers would now be in place. I have no doubt that you're equally on top of issues in Florida.
Lisa - A true real estate professional does keep on top of these things. If we don't communicate our successes ON BEHALF OF CONSUMERS, who will? Thanks for your compliment, and for all you share about happenings in New Orleans.
Sally - Through you and others on ActiveRain, I've learned that even the proposed taxes in Maryland were not any worse than they already are in some other places. Thank YOU for helping me to realize that.
Aziz - Yes, this was a good year for supporting Maryland RPAC!
Missy - Exactly! That's what we were facing. I never read about any other industries raising a fuss about new taxes on their services. I regret to say that it will probably touch the actual service provider, whose tips will probably be reduced by the amount of the tax. 'Glad you were successful in Michigan, too.
Margaret,
Nice post. Instead of scurrying around looking for places to raise taxes and nail the consumer with a larger burden, they should be cutting spending...just like we do in our family budgets!!! Thanks, Fran