MBRG Urges Caution On Widening Sales Tax Net

Towson, MD - As General Assembly attention turns to fiscal and budgetary issues, Maryland Business for Responsive Government urges legislators to carefully consider the consequences of legislation that extends the 6% sales tax to include new goods and services.

Maryland faces a $1.1 billion budget deficit. With questionable prospects for hiking the gasoline tax and eliminating some tax deductions, such as mortgage interest, some lawmakers have expressed interest in applying the sales tax club to a growing number of products and services as the revenue-generating tool of the moment.

"Hiking taxes across such a wide swath of our economy is a blunt instrument that only helps those who want to grow government at the expense of businesses and jobs," said MBRG President Kimberly M. Burns. "A more precise way of balancing the state's budget is to go through it line-by-line to look for spending reductions, before raising taxes yet again."

Maryland already faces a high tax burden relative to the vast majority of other states. Adding new sales taxes on professional services raises the cost of doing business – and in certain cases, will put others out of business. As with the alcohol tax last year, imposing a new sales tax introduces complexities at point-of-sale systems and gives regulators wide latitude in interpreting the laws required to
implement the new levies.

“Tax increases, especially increases in the sales tax and gas tax, are incredibly regressive. When one considers the intended practical effects of imposing the computer services tax in 2007, which was later repealed, any changes to Maryland’s tax structures need to be done with surgical precision and not as an 11th hour search for revenues," said Burns. "Costs associated with altering these taxes could impose more serious hardships on Maryland’s working families.”