OCEAN CITY, MD., OCT. 8 -- An influential Maryland commission plans to propose higher income taxes for the wealthy and an expansion of the state's sales tax to remedy persistent revenue problems of poor jurisdictions such as Baltimore, the committee's chairman said today.

The plan is likely to ignite a major battle between the state's wealthier suburban counties, most of them in the Washington area, and the poor rural and urban ones. Montgomery County politicians and leaders have been especially suspicious of the tax commission, appointed by Gov. William Donald Schaefer (D), complaining that their county already provides much more in taxes to the state than it receives in services.

But Montgomery lawyer R. Robert Linowes, who heads the Commission on State Taxes and Tax Structure, said his group had set aside such "parochial" concerns to see how taxes in Maryland could be managed more fairly.

The commission, appointed three years ago, plans to release its recommendations after next month's elections. Linowes offered the first glimpse of the group's plans today, and the debate is likely to dominate the session of the new General Assembly that will gather in January.

Legislators will be confronted with a deficit estimated to be as much as $300 million, a slowing economy and a proposal to increase the state's gasoline tax. Legislative leaders today said they didn't know whether the General Assembly could handle an overhaul of the state's tax system as well.

Linowes, speaking before the Maryland Chamber of Commerce meeting here, acknowledged that Maryland already relies more heavily on income tax than most states, but said the state's flat 5 percent levy was unfair. He said the recommendations would include new tax rates and deductions to shift the tax burdens to those who earn more. He also said the changes should raise more money, rather than be revenue neutral.

Linowes said the state's sales tax should be expanded to include services. He would not specify which are to be included, but other states and the District of Columbia have attempted at times to tax such professional services as lawyers' fees or advertising. Most attempts have been unsuccessful, and a wide-ranging tax on services in Florida was repealed after a firestorm of criticism from the business community.

Linowes would not say whether the panel will seek to increase the 5 percent sales tax generally. He said the panel does think that broad exemptions to the state sales tax are part of the reason Maryland now collects relatively less than other states from that source.

"Ultimately, the service sector must pay its fair share," Linowes said.

Those recommendations, and others dealing with property taxes, are meant to raise a specific amount of money to spend on such targeted areas as education.

The report already has become an issue in Schaefer's reelection campaign, with Republican candidate William S. Shepard criticizing its timing and saying Schaefer should reduce state spending rather than look for tax increases.

In a speech this evening, Schaefer encouraged business leaders to back the report, and said he was ready to push for the changes now. "Don't let them {legislators} say it is too late," Schaefer said. "That is the way to stop the Linowes commission before it even starts."

Schaefer aide David S. Ianucci said the governor is ready for a broad discussion about how money is raised for government and what obligations residents of the state's richer communities have to see that schools and other services are adequately funded in the poorer areas.

Linowes said he hoped legislators and county officials will not weigh the commission's ideas according to their jurisdiction's own interests and ignore the problems of ailing Baltimore or the poorer counties of the Eastern Shore.

He pointed out that Baltimore spends less than $5,000 per pupil on its schools, compared with about $7,000 in wealthier jurisdictions such as Montgomery County. If the state doesn't move more quickly to correct those disparities and others, Linowes said, Maryland could face lawsuits such as those that have led to courts declaring some school funding proposals unconstitutional.

"We needed to set aside the biases that grow out of a more parochial perspective," Linowes said. He was supported by Baltimore Mayor Kurt L. Schmoke (D), who shared the platform with Linowes in a panel discussion entitled "Redistributing the Wealth."

But Montgomery County Executive Sidney Kramer (D) said that Baltimore's plight should be addressed through targeted grants rather than an overhaul of tax rates. He said federal budget cuts and general economic uncertainty mean the legislature should wait at least a year before acting on the committee's major recommendations.

Tyras S. Athey (D-Anne Arundel), chairman of the House of Delegates' Ways and Means Committee, agreed.

"I don't vote for any dramatic changes this year," Athey said.