Blog
Maryland Business Community Shows Historic Opposition to Proposed 2.5% Services Tax
Mar 13, 2025
In what observers are calling the largest business turnout for a tax hearing in recent memory, over 100 Maryland business owners, executives and employees flooded Annapolis on March 12 to testify against a controversial proposed 2.5% sales tax on business-to-business services. The overwhelming response included more than 100 businesses prepared to testify in person and virtually, with nearly 400 registering their formal opposition to House Bill 1554 and Senate Bill 1045.
The Voice of Business Was Heard
Hours before the legislative hearings, the Maryland Chamber of Commerce, Maryland Retailers Alliance, National Federation of Independent Businesses and many other business and trade associations, accompanied by business leaders and owners from across the state, led a powerful press conference just steps from the State House.
The message delivered was clear: While Maryland businesses understand the state's budget challenges, this tax would devastate local companies, force price increases for consumers, and ultimately drive businesses across state lines.
Kimberly Prescott, President and Founder of Prescott HR in Columbia, explained: "This bill means an additional $40,000 in costs — costs that will have to be passed on to my clients, the very businesses I started Prescott HR to support. These are not luxury services; they are critical functions that allow businesses to stay compliant, pay employees correctly, and navigate complex federal and state laws."
The proposed tax would apply to essential business services including:
- Accounting and payroll processing
- Legal services
- IT support and computer systems
- Marketing and advertising
- Consulting services (HR, management)
- Engineering and architectural services
- And many more
Real Consequences for Real Businesses
During the press conference, business owners shared specific examples of the devastating impact:
Jeff Wilson, Principal of The W2 Group: "This isn't speculation — it's happening now. Businesses are actively calculating the savings of moving across state lines. For many near the border, this tax will be the final push to relocate just a few miles away."
Sandip Patel, CEO of Crosswinds Hospitality: "This tax would cost my hotel operations approximately $80,000 annually — capital that would otherwise go toward hiring and property improvements. It would effectively eliminate a significant percentage of our annual profits."
Juliana Buonanno, CEO of TechSlice: "In med tech, margins are incredibly thin, and we compete globally where even a 1% price change can cost us contracts. This tax would directly erode our ability to compete internationally."
During the hearing, business owner after business owner addressed the General Assembly with emotion and facts, describing in stark terms the financial impact they'd face and the impossible choices they'd be forced to make. Many expressed exasperation that the General Assembly continually looks to businesses as the solution for budget shortfalls rather than addressing underlying structural problems.
Maryland Already Struggles with Competitiveness
Mary Kane, President and CEO of the Maryland Chamber of Commerce, highlighted Maryland's already challenging business environment:
"Maryland ranks as the 3rd most expensive state to do business, 41st for percentage job growth, and has the 46th worst business tax climate nationally. With this new tax, we're not just maintaining these troubling positions — we're actively racing to become the least competitive state in the nation."
Cailey Locklair, President of the Maryland Retailers Alliance, emphasized the hidden impact on consumers: "When retailers face higher costs for essential services, those costs inevitably flow to Maryland shoppers through higher prices. This hidden consumer tax couldn't come at a worse time for families already struggling with inflation."
More Than Just a Business Issue
The cascading effects of this tax would extend beyond balance sheets. When businesses struggle:
- Jobs are eliminated
- Community sponsorships for youth programs disappear
- Charitable donations decrease
- Investment in neighborhood projects diminishes
Bill Chambers, President & CEO of the Salisbury Area Chamber of Commerce, noted the disproportionate impact on small businesses: "Small businesses are the heart of Maryland's economy, and they're the ones who will bear the heaviest burden. This tax is an assault on the very foundation of our economic ecosystem."
Your Voice Matters More Than Ever
The extraordinary response from the business community — over 1,500 individuals contacting policymakers, hundreds submitting testimony and more than 100 appearing in person — demonstrates the power of collective action.
Policymakers have heard our unified message. Now they must decide: Will they protect Maryland's economic future or drive businesses to neighboring states?
Join the Movement
Your engagement made this historic showing possible. To continue building on this momentum and ensure the business community's voice remains at the table:
Strengthen Our Collective Voice: The Maryland Chamber PAC amplifies our advocacy efforts, supporting research on economic impacts, building effective coalitions and ensuring business perspectives inform policy decisions.
Get Involved: Share your story with legislators, join our coalition partners and connect with other businesses facing similar challenges.
Support Continued Advocacy: Your contribution to the Maryland Chamber PAC helps protect Maryland's business climate and promote policies encouraging economic growth and job creation.
Wednesday's unprecedented turnout proves what we can accomplish together. Every business voice matters — whether you've been engaged for years or are just finding your voice. Together, we can ensure Maryland becomes a place where businesses thrive rather than merely survive.
Strengthen our collective voice and support the Maryland Chamber PAC's advocacy efforts: mdchamber.org/PAC.
Thank You for Standing Together
Thank you for standing with Maryland's business community. Your participation makes our unified voice impossible to ignore.
The extraordinary turnout we witnessed in Annapolis demonstrates what's possible when businesses unite behind a common cause. From the Eastern Shore to Western Maryland, from sole proprietors to major employers, the business community spoke as one.
Every email sent, every testimony given, every conversation with legislators matters. You took time away from running your businesses to defend not just your own interests, but the economic future of our state.
This is just the beginning. Together, we will continue to ensure that policymakers understand the real-world impact of their decisions on the employers, entrepreneurs, and innovators who drive Maryland's economy.
Thank you for making a difference.
Media Amplifies Our Message
The extraordinary response from the business community didn't go unnoticed by the press. Media outlets across Maryland covered the unprecedented turnout, with:
- The Baltimore Banner: How might Maryland politicians raise your taxes and what could it cost you?
- The Baltimore Banner: As momentum builds in Annapolis for new B2B tax, businesses fight back
- Baltimore Business Journal: Businesses flood Annapolis to oppose tax bill
- The Daily Record: MD business community rails against proposed 2.5% services tax
- Maryland Matters: Business leaders say they’re tired of being villainized, used as ‘an ATM’ by lawmakers
- The Star Democrat: State's proposed hidden tax would take big bite
- The Washington Post: Maryland businesses warn service tax will drive companies out of state
- WBAL: Small-business owners in Maryland speaking out against 2.5% business tax proposal
- WBAL-TV: 'In some cases, they will have to close': Opposition grows against proposed business-to-business tax
- WBOC: Maryland tax proposal sparks fierce debate in Annapolis
- WMAR-2 News: Business-to-business services sales tax proposal draws hundreds in opposition to Annapolis
- WYPR: Maryland lawmakers consider business-to-business service tax
Coalition Members
The press conference was organized by a coalition that includes:
- Maryland Chamber of Commerce
- Maryland Retailers Alliance
- National Federation of Independent Businesses
- Maryland Chamber Federation
- American Property and Casualty Insurance Association
- Apartment & Office Building Association of Metropolitan Washington
- Associated Builders and Contractors of Metro Washington
- Association and Council of Automotive Repair
- International Franchise Association
- Mid-Atlantic Petroleum Distributors Association
- Maryland Association of CPAs
- Maryland Association of Realtors
- Maryland Building Industry Association
- Maryland Hotel Lodging Association
- Maryland Multi-Housing Association
- Maryland Motor Truck Association
- Maryland Restaurant Association
- NAIOP Maryland
