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MoCo Energy Tax - Residential

May
6
2010

We've already looked at how the proposed Montgomery County tax hike can potentially affect businesses and commercial property holders. Today, we'll take a look at how the proposal may affect all residents of Montgomery County.

As you may have heard, County Executive Ike Leggett wants to raise the energy tax by 100% for anyone who pays a bill in the county. What's more, this tax is on each kilowatt or therm burned, so while the rate-lowering service we provide definitely helps offset the tax, we don't directly affect the tax.

From a dollar standpoint, Leggett's proposal would hurt businesses much, much more than residents, because commercial utility-account holders pay more than 2.6 times the tax rate than residential account holders.

At a council committee workgroup session last week, though, there was talk of making the hike more evenly distributed among the two groups; in other words, make the tax hike around 65% to 75% for commercial, and 125% to 135% for residential. Those numbers aren't exact, but they represent the general range that was discussed at the meeting.

While this is good news for commercial utility payers in a "kinda, sorta, but you're still hiking our taxes big-time" way, it hurts residents even more. For a perfect example, let's take my personal electric bill. Last month, we burned 897 kWh at our house. At the current rate, we paid $4.79 in Montgomery County energy taxes for April-- by far the largest line item of taxes on our bill, by the way.

Doubling that amount would bring it up to $9.58 for April, which is what Ike Leggett's proposal would say I need to pay. With Council looking to even things between commercial and residential, let's say that the number would be around 130%. That would raise my tax to a bit more than $11 bucks for the month. From $4.79 to $11-plus. Wow.

I admit that April is not a big electricity-usage month for us. Looking at last September's bill, for example, we burned 1887 kWh of electricity. At the current rate, our tax would have gone up from $9.85 to $19.71 under Leggett's plan, and up to around $22.66 with what council is considering. Not a good September.

Granted, that dollar amounts involved aren't nearly as drastic as what many commercial account holders are looking at paying. Some of those companies could be paying tens and even hundreds of thousands of dollars a year more than residents.

There's another big concern for county residents, by the way. Not only will they be paying higher energy taxes, they'll be paying for businesses' higher taxes, too. That's because no business will be able to absorb such a huge tax hit. They'll have to pass it on to their customers ... you.

At a time when some businesses are just starting to climb out of the recession, and others are still feeling its effects, raising taxes can hurt businesses on the upswing, and crush those that are mired in our economic muck. In addition, if I'm looking at moving my company to the DC area and I see that Montgomery County's energy tax is sky high, I'm going to be seriously considering other Maryland counties, the District or Virginia as my new corporate home.

The people for which I really feel sorry are those who live in multi-unit housing. If someone living in a condo or apartment pays their own bills, they'll have to absorb both their own tax increase along with the increase being paid by their condo association or apartment landlord.

Those who live in an apartment building where the landlord pays all of the bills will get a big shock at lease-renewal time. They'll have to shoulder all of the tax hike. Worse yet, they'll pay even more, because such buildings are taxed at the commercial rate. Add on the higher prices they'll pay because businesses will pass on their higher costs to consumers, and you've got real trouble.

You have to remember, though, that these are all just proposals. Who knows where things will shake out. Percentages may change again, some types of buildings may be handled differently, etc. One aspect of the tax I personally hope changes is the total amount the county wants to get from it - $150 million. If that amount can be dramatically lowered by getting it from other departments, the county's economy shouldn't be affected as much.

From what I heard last week during and after the council committee meeting, though, I'm not holding out much hope. Unless attitudes change dramatically at the county level, every single person or entity that pays a utility bill in Montgomery County will be seeing much-higher energy taxes, and soon. That's bad news for all utility bill payers in the county, and for the county's economy overall.

Related stories/content_

Montgomery County Energy Tax Hike Information
Montgomery County Energy Tax Hike – Update

Mobilize Against the Montgomery County Energy Tax
We Giveth, They (Want To) Taketh Away


Tagselectricity, Green, montgomery county, natural gas, taxes

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