The Prince George’s County Council gave final approval to a plan that will substantially change how taxes are collected on phone lines, including how much money is collected.
On a 7-3 vote, the council approved the elimination of the 9% sales tax on phone lines to a $3.50 excise tax. On the one hand, it’s simpler; but opponents of the measure argued it’s also going to cost taxpayers more.
There was a time the sales tax generated around $50 million in revenue for the county, but last year, that number fell to about $13.5 million. The $3.50 flat fee is expected to produce more than $50 million again.
“This change would result in a drastic 269% tax increase, raising the county’s tax telecommunications burden from $14 million to nearly $52 million annually,” said Addison Pruitt, who lobbied against the bill on behalf of the trade group representing the wireless industry on Tuesday.
“The main concern with this bill is that the proposed flat fee would impose the same tax burden on all consumers, regardless of income level or the type of wireless plan they currently have,” Pruitt added.
A representative from Verizon also spoke against the bill, as did the Prince George’s County Chamber of Commerce.
“While intended to streamline revenue, the sharp increase is deeply regressive and disproportionately impacts small businesses that rely on multiple lines to operate efficiently,” said Alex Austin, who leads the chamber.
“For many local businesses, especially startups, sole proprietors and firms with field or remote staff, this tax could translate into hundreds of dollars in added annual costs,” Austin added. “And at a time when small businesses are still navigating the financial shock waves of rising inflation, this increased expenses may also enforce cutbacks in hiring, wages and technology investment.”
Seven of the 10 members voted to pass the bill, with the strongest support expressed by anyone being the word “aye” when asked for their vote. At the same time, none of the three who voted against it said a word about their vote either.
It’s a vote that’s been a long time coming.
Last year, the county began making moves to switch from a sales tax to the excise tax, which is used in neighboring jurisdictions. It was also the only tax increase included in the budget proposal released by acting County Executive Tara Jackson.
For several months, her office had been stressing the importance of passing the measure in order to balance the budget this year.
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