D.C. Mayor Marion Barry said yesterday he has abandoned a controversial plan to raise an additional $8.3 million in public utility taxes that would have boosted utility costs for many District users and had its greatest impact on federal agencies and non-profit organizations.
Barry said in an interview that he would support an alternative proposal by City Council member John A. Wilson (D-Ward 2), chairman of the council's finance committee, that would raise the same amount of additional tax revenue but without major increases in utility rates.
Barry originally had proposed that the city abolish its current 6 percent sales tax on utility usage, paid directly by customers. At the same time, the proposal would have raised the city's existing gross receipts tax on utilities, which is paid by the utility companies but passed on to consumers in the form of higher rates.
The proposed sharp rise in the gross receipts tax would have had its greatest impact on federal agencies and nonprofit groups, which are now exempt from the 6 percent sales tax on utility usage but are subject to the higher rates that would be triggered by an increase in the gross receipts tax.
Officials of the federal General Services Administration had complained that its utility bills would rise about $10 million a year under the mayor's plan and had vowed to oppose the measure in Congress.
Aides to Wilson said that GSA would pay less than $1 million in higher utility costs under his plan, which would retain the existing sales tax and raise the gross receipts tax from 6 percent to 6.7 percent.
The city's own utility costs, which would have risen $4 million under Barry's plan, would increase only a small fraction of that amount under Wilson's alternative, a staff member said.
Barry and council aides said the plan was worked out during negotiations among Wilson, city tax officials, the Public Service Commission and the federal Office of Management and Budget.
The utility tax plan is similar to Barry's efforts to shift $12 million in street lighting costs, which the city now pays directly to Pepco, to all users of electricity in the District.
That proposal, which is strongly opposed by the Potomac Electric Power Co., also would have the result of increasing costs of the federal government and nonprofit groups and faces possible opposition. Barry said Tuesday that he was confident that the street lighting proposal would be approved by the Public Service Commission.
In other council action, a council committee refused to endorse Barry's plan to raise about $3 million in auto tag registration fees.
Council member Polly Shackleton (D-Ward 3) and Hilda Mason (Statehood-At Large) said the plan discriminates against owners of smaller cars, since they would pay about 35 percent more under the proposal as opposed to an increase of about 6 percent for owners of large cars.
Shackleton told the committee on transportation and environmental affairs, which had been asked to comment on the proposal, that she would propose a revised fee schedule that would raise the same amount of money but spread the increase "more equitably to all car owners."
Committee chairman Jerry A. Moore Jr. (R-At Large) and council member William R. Spaulding (D-Ward 5) supported Barry's proposal.