No gambling tax increase for Beach

Wednesday, June 3, 2009

"It is my view that the provisions of House Bill 193 would prevent the Town of Chesapeake Beach from increasing the rate of this tax," Assistant Attorney General Kathryn Rowe wrote to Del. Sue Kullen (D-Calvert) in a letter dated June 1. The letter responded to a request for clarification by Kullen, who co-sponsored the bill, which granted a three-year extension to certain holders of commercial gambling licenses in Calvert and Anne Arundel counties. Under a previous law, electronic gambling would have had to cease by July 1.

The town, according to the letter, had been seeking approval to raise the long-standing 0.5 percent tax on pull-tab machines to 0.75 percent, but this is prevented by a provision in the bill freezing local tax rates at their level on the first of this year.

Kullen said the freeze was necessary to prevent the businesses from being crushed by rising taxes.

The bill increased the state tax rate on gambling proceeds to 30 percent from 20 percent; allowing counties and municipalities to increase their own tax rates as well would provide too uncertain a climate for the businesses, she said.

"We were creating that predictable tax ceiling. … Some counties were proposing a $10,000 per-machine tax and that was just not going to be doable by the businesses," she said.

Overall, passing the bill was the best decision for the town, she said.

"There's been some criticism for this particular bill, and I think the thing I just wanted to make sure people knew [is], in a downed economy, this was a way of preserving jobs and current businesses in Chesapeake Beach, [rather than] watch it sunset 100 jobs," Kullen said. At its current rate the gambling tax already earns about $700,000 in revenue for town coffers, she said.

Chesapeake Beach Mayor Bruce Wahl did not immediately return a call seeking comment.

emitrano@somdnews.com