Say No to Taxing Services: Protecting Maryland’s Businesses and Families

Annapolis, Md. — The Maryland Chamber of Commerce, along with a coalition of businesses, local and regional chambers and associations from across the state, strongly opposes House Bill 1515. This legislation, titled “Sales and Use Tax – Rate Reduction and Services,” is a misguided attempt to fund critical priorities through a massive $2.9 billion tax increase on Maryland residents and businesses.

While HB 1515 proposes lowering the state sales tax rate from 6% to 5%, it would simultaneously expand the sales tax to a wide variety of everyday services that have never been taxed before, including, but not limited to:

• Accounting and financial planning services
• Legal and appraisal services
• Real estate services
• Shipping and delivery services
• Transportation, towing and parking services
• Auto mechanic services
• Grocery delivery, gym memberships, personal training services
• Home repair and improvement services
• Home cleaning and mold remediation services
• Landscaping and tree removal services
• Dry cleaning and laundry services
• Nail salon, barber shop and beauty salon services
• Veterinary and pet grooming services
• Advertising, public relations, printing and media streaming services
• Funeral services

This draconian tax expansion is being considered as a way to cover funding gaps created by numerous unfunded policy mandates and costly legislation passed in recent years. However, placing such an enormous burden on Marylanders and small businesses is not the answer.

While the policies driving these funding needs may be well-intended, the proposed solution of a $2.9 billion tax increase through HB 1515 fails to fully consider the severe economic impacts it would have on Marylanders, businesses, and our state's competitiveness.

“Taxing everyday services that Maryland residents and small businesses rely upon would have a devastating impact on Marylanders, the small business community and our state’s economy,” said Mary D. Kane, President & CEO of the Maryland Chamber of Commerce. "While intended to raise education funding, HB 1515's $2.9 billion tax hike will come directly out of the pockets of hardworking residents and small business owners. This massive cost increase will discourage businesses from expanding or relocating here and make Maryland far less attractive for people to live and work, severely undermining our competitiveness.”

“The General Assembly floated this exact same idea in 2020,” said Mike O’Halloran, state director for NFIB in Maryland. “The realities for small businesses now are the same as they were back then. They are operating in a decidedly unfriendly environment when it comes to the cost of doing business. Maryland ranks 45th for its business tax climate. Adding HB 1515 on top is untenable. The cumulative effect of recent policy decisions by the legislature cannot be understated — mandated sick leave, minimum wage hike, paid leave insurance and all the reporting requirements these and other recent laws have created. Maryland small businesses are looking for opportunities to grow, not be consumed with unfunded mandates, new taxes and red tape.”

“A variety of aggressive tax increases have been proposed to pay for numerous unfunded mandates, including at the last minute, this bill. We need to look at the math here; if you add all the proposed tax increases together on the table, they still don’t cover normal State government increases, the deficit and all of the new costly polices coming online like education and green building standards. Marylanders are already feeling the squeeze with increased car insurance and massive property tax hikes — the will isn’t there to stomach more,” said Cailey Locklair, President of the Maryland Retailers Alliance.