Montgomery County Passes Carbon and Energy Tax

Real Estate, Land Use & Construction Law

Montgomery County Passes Carbon and Energy Tax

May 24, 2010 | Real Estate, Land Use & Construction Law

Tax Last week, Montgomery County, Maryland passed what has been described as the nation’s first local carbon tax . The tax imposes $5 per ton on any entity that emits more than 1 million tons of carbon dioxide in a single year. Interestingly, the tax only applies to Mirant Corporation which owns the Dickerson Generating Plant in Montgomery County. Mirant will reportedly challenge the tax in court. The county also passed an 85% increase on its energy use tax.

The passage of the tax highlights the distinct differences in local authority between Maryland and Virginia. In Maryland, localities are far more free to adopt their own regulations, taxes and requirements. Proponents point to increased local control. Detractors point to the patchwork regulatory scheme in Maryland which makes doing business across the state more complex and potentially expensive.

In Virginia, the Dillon rule still controls which provides that localities only have the powers given to them by the state. While often criticized by local officials seeking more muscular authority, it does tend to lead to more uniformity in business regulation, taxes, and code requirements. This can be particularly important in the real estate and construction industries. It appears clear that localities in Virginia would not currently be able to pass a local carbon tax like that passed in Montgomery County, Maryland.

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