Evening star., 1947-03-28

Maryland's newly-enacted 2 per
cent sales tax law will present
authorities with major enforce
ment problem because of the proX-
unity of tax-free Washington and
Virginia, and the use tax to cover
items bought outside Maryland will
be protected only by an "honor
system" 1t appeared today.
In answer to predictions that
Marylanders will swarm into, the
District to evade the tax by shop
ping here, observers pointed out that
a companion law calls for tax pay
ment by Maryland residents on
items they buy outside their own
jurisdiction.
The law provides that any Mary
lander who enters the District to
buy manufactured goods, building
materials or other items subject to
their State sales tax, must pay a
2 per cent use tax on the item in
Maryland. The law does not state
what agency is going to follow
Maryland shoppers back across the
District line every time they come
into Washington for tax-free pur-
chases.
Hope for Cooperation.
A large number of Maryland resi-
dents, with no downtown-type de-
partment stores in their own juris-
dictions, have done their shopping
in Washington stores for years.
Under the new law, they will have
to pay Maryland's per cent use
tax for items they purchase in
Washington, even though the Dis
trict has not sales tax now.
Violation of the sales tax law is a
misdemeanor and punishable by a
fine of $1,000 or year in Jail, or
both. Authorities, however, seem to
face an impossible enforcement
problem. They hope for the Co
operation" of taxpayers under the
honor system.
After studying the new law, VIII
liam H. Press, executive secretary of
the. Washington Board of Trade,
predicted temporary increase Of
sales by District stores to Maryland
residents.
Every one will be very conscious
| Of the new tax at first" Mr.. Press
said, "but after a few months or a
year, Maryland residents will get
used to the sales tax and gradually
return to their ordinary dealers"
District stores are required, under
the new Maryland law, to get
licenses If they intend to deliver
tax-free goods into Maryland where
the use tax could be applied to the
item. District stores, under the
plan would be forced to file returns
to Maryland authorities on sales to
Maryland buyers. Some have ques-
toned, however, whether this out
of-State licensing is enforceable
No State, of course, may levy a
direct tax on an item in interstate
commerce, but use taxes by the
States have been upheld by the Su-
preme Court.
Maryland dealers, many of whom
have been talking about absorbing
the sales tax themselves by cutting
the amount of the sales tax on 1t in
order to protect themselves from
underselling in the District cannot
do this if they plan to advertise
their method. The law restrains
retailers from advertising this prac-
tice and makes it misdemeanor
They can, however, absorb the tax
themselves by lowering the purchase
price without fanfare and billing
price and tax separately.
Mr.. Press said the city of Blue
field, which stands partly in West
Virginia and partly in Virginia, has
been in situation akin to the new
and-Washington tax relation
ship for some time. The West Vir-
ginia part Of Bluefield has a sales
tax while the Virginia part does not.
Mr.. Press said merchants in Blue
field claim to be completely un-
a1ected by the price differences i'm
posed by the different jurisdictions.
He pointed to several develop
ments likely to happen in nearby
Maryland counties when the law
goes into effect.
Purchase of refrigerator will
probably involve an itemized bill
separating the actual price of the
Observation-Disclosures the la
Dor charge for installation-not tax
able. The same undoubtedly will
apply to the work Of paper hangers,
plumbers, carpenters and other
craftsmen.
A scent cup Of coffee bought in
a Maryland restaurant will not be
taxable. but a meal will, Mr.. Press
pointed out, because the law ex-
empts only cafe prices under cents.
Just how a restaurantgoer is going