Heavy Machinery Taxation Bill – Moving Forward as a Compromise

SB 685, legislation to implement a new gross receipts tax on heavy machinery rentals to replace the current personal property tax, has been approved by the Senate Budget and Taxation Committee with extensive amendments. The amendments reflect a compromise reached by local governments with the affected industry, which had been actively sought by bill proponents.

The amended bill will, in short:

-impose a 2% gross receipts tax on heavy machinery rentals, payable to counties and municipalities

-exempt the same heavy machinery from the personal property tax

-require an annual “true up” where the receipts from the GRT are compared to the revenue lost from the personal property tax exemption, and any shortage is billable to the owner company

The amended bill will avoid new administrative complications on either the state or the local governments, and ensures that the result is at least revenue neutral for the local governments who currently collect personal property taxes on this industry. The new gross receipts tax system is comparable to that used in several surrounding states.

the bill is expected to be heard, and amended, on the floor of the Maryland Senate this week. A comparable bill in the House, HB 817, has not moved but is likely to move in comparable form, if at all.

Michael Sanderson

Executive Director Maryland Association of Counties

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