Maryland County Council Dials up Telecom Tax Hike

Published May 27, 2015

The Prince George’s County Council is considering increasing the Maryland county’s tax on landline and wireless phone service by 4 percentage points.

The proposed tax hike, included in the County Council’s fiscal year 2016 budget, would increase the telecom tax from 8 percent of a user’s bill to 12 percent of the bill, representing a 50 percent increase.

‘Staying Connected with the Economy’

The proposed tax hike would increase the burden on the county’s taxpayers, says Steven Titch, a telecommunications policy advisor for The Heartland Institute, which publishes Budget & Tax News.

“Especially wireless service—more than ever—but also phone service and internet service are vital these days to anyone looking for a job or holding a job,” Titch said. “It’s a tool for staying connected with the economy. If you want to nurture a local economy, especially at the county level, you want to make it easy for people to get jobs, for businesses to locate there, and for businesses to be able to have employees and an employment base.”

Titch says the tax hike will discourage businesses and families from relocating to the county.

“If somebody knows they’re going to move from one county line over and their wireless bills are going to skyrocket because of it, they may reconsider,” Titch said. “Businesses that pay for wireless service on behalf of their employees are going to think twice about employing people from Prince George’s County.

“The county is not going to get any extra revenues out of this, but the cost will be jobs and [suppression of the] local economy. People will have less money to spend on local businesses, and less reason to live within the county,” Titch said.

Burden of Proof

John Walters, a research associate at the Maryland Public Policy Institute, says taxpayers should be very skeptical when lawmakers create new taxes to fund specific purposes.

“With any proposed tax increase, taxpayers should be asking, ‘What is this money going to be used for?'” Walters said. “We are often told that we need a higher tax for some specific purpose, but before long that original purpose is long forgotten and the extra revenue is diverted to the general fund.”

Walters says the burden of reassuring taxpayers about the use of additional revenues lies with the lawmakers proposing the new tax.

“The burden is supposed to be on the government to justify why increased taxes are necessary, and why they need to spend as much as they do,” Walters said.

Proposing taxes without proving there’s a specific need for them is “not the way things are supposed to work, but it’s all too common,” said Walters.

Amelia Hamilton ([email protected]) writes from Traverse City, Michigan.