COMMENTARY
Commentary: No to Taxing Services, Yes to Protecting Maryland Business and Families
Mar 6, 2024
Maryland business organizations oppose sales tax expansion
Imagine having to pay taxes on everyday services like getting your car repaired, hiring a landscaper, paying for childcare, or even taking your pet to a veterinary appointment. Or, owning a small business and having to pay taxes for accounting and legal services, shipping and delivery services or advertising and printing services. For Maryland residents and businesses, this could become a reality if the proposed House Bill 1515, deceptively labeled "Sales and Use Tax – Rate Reduction and Services," becomes law.
While HB 1515 proposes a modest reduction in the state sales tax rate from 6% to 5%, it simultaneously aims to expand the sales tax to a wide range of services that have never been taxed before — a move that would result in a staggering $2.9 billion tax increase coming out of the pockets of Maryland residents and businesses.
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. While those policies may be well intended, placing an enormous burden on Marylanders and small businesses to pay for them is not the answer.
The list of services that residents and businesses would now have to pay a sales tax on is long. From real estate, parking, transportation, towing, grocery delivery, gym memberships, salon services to home repairs, dry cleaning, and even funeral services — very few services would be spared under this sweeping legislation.
The consequences of such a move would be devestating for the state's economy
Small businesses, the backbone of Maryland's economy, would be disproportionately impacted. Many small and emerging companies heavily rely on outside services like legal counsel and accounting that larger firms can provide in-house. Taxing these services would discriminate against these small businesses, stifling their growth and competitiveness.
In addition, HB 1515 increases the likelihood of pyramiding taxes, where goods and services get taxed multiple times, driving up consumer costs. Lower-income Marylanders would be particularly hard hit, as a larger portion of their disposable income would be consumed when patronizing local businesses for everyday needs.
The reality is that this massive tax hike would come directly out of the pockets of hardworking residents and small business owners. It's a financial burden that would discourage people from living in Maryland and businesses from expanding or relocating to the state, making Maryland far less attractive for people to live and work, severely undermining its competitiveness.
As the state's leading business organizations have warned, Marylanders are already feeling the squeeze from increased costs and tax hikes. Imposing this additional $2.9 billion tax increase would be a bitter pill to swallow, especially when more balanced solutions likely exist to fund critical priorities while promoting a strong economy and competitiveness.
Maryland's hardworking families and job creators deserve better than misguided tax policies that destroy the state's competitiveness, stifle small business growth and place an unfair burden on residents.
Protecting Maryland's businesses and families should be the top priority, and saying no to taxing services is the first step in that direction.
Legislators must heed the concerns of their constituents and reject House Bill 1515 to safeguard the state's economic strength.
Time Sensitive: How to Make Your Voice Heard
If you are interested in testifying, please be sure to sign up Thursday, March 7. If you need testimony sign up assistance, please contact us at mdchamber@mdchamber.org.
- Testimony must be filed between 8:00 a.m.–6:00 p.m. on Thursday, March 7.
- To submit testimony or sign-up to testify, you must create a MyMGA account at mgaleg.maryland.gov.
- The committee does allow testimony via Zoom, but in-person is strongly encouraged. If testimony is given via Zoom, a link will be sent by close of business on the day before the hearing to the email associated with your MyMGA account.
- Each participant has 2 minutes to testify.
- Visual presentations are not allowed, although they may be submitted with testimony in PDF form.
Please review the guidelines for providing written and/or oral testimony.
HB 1515 will be heard by the House Ways & Means Committee on Monday, March 11 at 11:00 a.m.
Mary D. Kane
President & CEO
Maryland Chamber of Commerce
