ANNAPOLIS – Comptroller William Donald Schaefer — the head of Maryland’s tax-collecting agency — said Monday that he supports a bill suspending the sales tax on purchases of clothing and lodging for one week.
“I believe this legislation will be of significant benefit to Maryland’s retailers as well as to our very important and growing hospitality industry,” Schaefer wrote to Sen. Barbara Hoffman, D-Baltimore City, chairwoman of the Senate Budget and Taxation Committee. “This concept has worked in other states, and I’m sure that Maryland would enjoy the same benefits if the legislation were enacted.”
Schaefer’s support is unusual in light of his position as the state’s tax collector, but in an interview he explained, “One of my real, real interests in the state is economic development.”
Hoffman said she would not comment on the bill before its hearing.
The bill allows for one week of sales tax-free shopping starting August 7. It is timed to give families a 5 percent break on back-to-school clothing for children. The onetime tax exemption applies to any item of clothing under $100, except shoes and accessories, including book bags and belts.
Gov. Parris N. Glendening has not taken an official position on the bill, but Press Secretary Ray Feldmann said, “If the legislator thinks it’s worth doing than we’ll take a look at it.”
However, Glendening is reported to be less than enthusiastic about the bill and its projected $4.1 million tax loss.
“He’s wrong if he thinks it’s a gimmick,” said Schaefer, who has been at odds with the governor since the beginning of the session. “He should think up some gimmicks to stir up the economy in Maryland.”
The sponsor of the bill, Delegate Jean Cryor, said that there is strong public support for the tax-free week.
“There’s not a mom in the world who doesn’t understand this one,” said Cryor, R-Montgomery. “All we have to do is educate some politicians.”
The state likely will loose some tax revenue, she said, but it will keep Marylanders from shopping in neighboring states without sales tax on clothing.
“Otherwise, the whole dollar is going to Delaware or Pennsylvania,” she said.
Tom Saquella, president of the Maryland Retailer’s Association, said he’s seeing more and more growth in outlet-style stores in Rehoboth Beach, Del., and Pennsylvania — stores that lure families from all over the state with savings on back-to-school purchases.
“A lot of those sales are coming at the expense of Maryland retailers,” he said.
The legislation also designates a second tax free week in January. That week would suspend the 5 percent sales tax on hotel rooms priced under $100 in an attempt to boost tourism in the off-season.
If it’s successful — meaning more revenue was generated than was lost — Schaefer said he would consider continuing the promotion after January 2000.
“I really hope they pass it,” said Schaefer, calling it a “good experiment.”
Cryor’s bill cleared the House of Delegates last week, 129-8, and will be heard in the Senate committee Thursday. That hearing will be a critical step because the committee failed to bring similar legislation to a vote last year.
“There’s a little more skepticism about the proposal in the Senate,” said Saquella. “I think we’re going to have to demonstrate that this is not a gimmick.”