HARRY HUGHES, Governor

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oversight, if it be an oversight, is likely to cause
problems if we seek to adopt regulations or take action to
enforce the statute.

5.  As previously noted, this legislation seeks to
create two entirely new taxing statutes, consisting of one
section each. These new statutes are only loosely tied to
the Retail Sales and Use Tax Acts in certain limited
respects. Left out are a great number of provisions
normally necessary to implement a taxing statute. Among
other things, no provisions have been made for the
responsibility of purchasers for the payment of the tax,
late payment penalties, interest, assessments, hearings,
appeals, refunds, licenses, liens, bulk sales, and
exemptions, to mention only a few.

6.  The legislation is decidedly not clear on the point
that once a sale of cigarettes has been subjected to the tax
that subsequent sales of the same cigarettes are not also
subject to tax. Indeed, the language of the legislation
leads to the opposite conclusion.

From a policy point of view, the legislation imposes a
number of burdens upon retailers which are hard to justify.
Retailers who buy from Maryland wholesalers (which should
not be a large number if this legislation takes effect) lose
not only the collection discount (1.25% of sales) and the tax
float from the existing sales tax (significantly more
important) but also will be required to put up the amount of
the new tax in advance of retail sales. We believe that it
is reasonably predictable that a number of small businesses
will not survive this battering of their working capital.

Those retailers who purchase directly from
manufacturers or from out-of-state wholesalers will be
confronted with the not insignificant problem of having to
ring up and collect the new cigarette sales tax separately
from the retail sales tax because the rates are different.

Because of all the foregoing problems, most
particularly because of the discrimination against Maryland
cigarette wholesalers, we strongly urge the veto of both
Senate Bill 532 and House Bill 1236.

With kindest personal regards and best wishes, we
remain,

Cordially,
Louis L. Goldstein
Comptroller

Henry A. Heinmuller, Jr.

Director, Retail Sales Tax Division