Multimedia: A conversation with Comptroller Franchot

April 1, 2008

Last month, Comptroller Peter Franchot sat down with editors at The Daily Record to discuss some of the challenges facing Maryland and his office’s role in overcoming them.

Listen to Franchot talk about the six percent tax on computer services, running the comptroller’s office and tax compliance.

Clips have been edited to remove background noise and to group related statements.

Read the full text of his remarks below or in the extended version of this post.

JACKIE SAUTER, Web Editor

On tax compliance:

It’s kind of a unifying issue because it doesn’t affect your philosophical view on taxes… it’s just, whatever’s on the books, can we make sure it’s enforced properly. And there’s a significant gap at the federal level and frankly, at the state level as far as compliance. But my sense is that it’s gotten worse in the last few years because of the attitude of the federal government about regulation of anything, from subprimes to the defense department. It’s just kind of a general atmosphere of “Nobody’s gonna catch you, so why don’t you go ahead and do it.” And you asked where most cheating occurs… it always surprised me when I asked my experts in the agency, I said, “Who cheats the most?” and they say, “It’s rich people. It’s not poor people.” …. Slot machines are endemic to Baltimore City and Baltimore County, which are cash businesses and areas where corruption is ripe, and tax cheating is uniformly… is ubiquitous, let me put it that way. I think the legislature is going to prohibit them this year. But in the interim, I’ve got auditors all over the place, walking into these establishments and there are just piles of cash and no documents.

On computer services tax:

Pennsylvania, Virginia, West Virginia… they’re all down here poaching our IT businesses… computer services. I’ve urged the legislature to repeal it, I hope they will. But this is a real… they’re really going into a ditch on this one. I’m not sure how they get out. Actually, if they move forward and implement it, in my opinion, they’re gonna have the worst of both worlds. They’re gonna have a really bad business reputation… actually, three things: a really bad business reputation; giving our rival states a huge competitive advantage; and they’re not gonna get very much revenue out of it. Because by the time I find them to tax them, they’re going to have flipped the switch and moved. So we get no revenue, and we lose jobs, and we get a reputation that’s very hard to get rid of… When Pennsylvania passed this law in 1991, they’re still suffering from the negative impact on their reputation.

On being head of the Comptroller’s office:

I’ve never really run a… something like the Comptroller’s office. Personally, it’s been quite satisfying. We’ve had a successful year with good accomplishments. And we’re going to continue that.. many of those themes, particularly the tax fairness theme, as we move forward. …On the Board of Public Works, I’ve worked very closely with the Governor, and we’ve completely changed the whole minority business enterprise program. It used to be the exception when the 25 percent state goal was met.

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Posted by Jackie Sauter | Filed Under business, multimedia 

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