Friday 5 | February 21, 2020
Did you know that on this day in 1885 the Washington Monument was dedicated in Washington, D.C.?
1. House to consider expansion of sales tax | Leaders in the Maryland House of Delegates have introduced legislation, HB 1628, that would expand the state’s sales tax to include professional services.
The bill would expand the sales tax to include many industries that are presently not taxed—including accounting, engineering and legal services—but would also lower the sales tax from 6% to 5% across the board.
The bill would maintain a sales-tax exemption on food, medicine, health services, educational services and the nonprofit sector.
House leaders maintain that the bill could bring in an estimated $2.6 billion in new revenue by 2025, and that this amount would be sufficient to fund the recommendations laid out by the Kirwan Commission. House Majority Leader Eric Luedtke told the Baltimore Sun that an average family earning $80,000 per year would pay approximately $3 more per week under the expanded sales tax, an amount he believes most Maryland families would be willing to pay for better education.
The bill has support from other leaders in the House, including leaders of the key committees of jurisdiction—Appropriations Chairwoman Maggie McIntosh, Economic Matters Chairman Dereck Davis and Ways and Means Chairwoman Anne Kaiser.
Note that House leadership has previously been adamant that an increase or expansion of sales, income and/or property taxes would not be necessary to pay for implementation of the Kirwan Commission.
The proposed legislation will obviously have a sweeping negative impact on service-based businesses in Maryland, as well as consumers. Upon release, the Chamber will review the legislation and vet it expeditiously through our policy and legislative committee processes. We have reached out to other negatively impacted stakeholders in order to coordinate our advocacy efforts. We are also working to prepare collateral material that MDCC members can use in engaging with legislators on this issue.
2. Tax on digital goods | The House of Delegates is also considering legislation—the 21st-Century Economy Sales Tax Act—that would impose a sales-and-use tax on certain digital products. In addition, the bill provides that all revenue from the tax be earmarked for the Maryland Education Trust Fund.
As defined, a digital product is a product that is obtained electronically by the buyer and delivered by means other than tangible storage media through the use of technology having electrical, digital, magnetic, wireless, optical, electromagnetic or similar capabilities to include:
- prerecorded or live music or performances, readings of books or other written materials and speeches;
- audio greeting cards sent by email;
- digitized sound files, including a ring tone;
- motion pictures, music videos, news and entertainment programs and video games;
- e-books;
- e-periodicals.
The bill is making its way through the Chamber’s policy and legislative committee processes, and the Chamber has not yet taken a formal position.
3. Joint hearing on the implementation of Kirwan Commission recommendations | On Monday, the General Assembly’s education and budget committees participated in a six-hour-long hearing on the Kirwan Commission education funding bill. Under the legislation, the state’s share of the increased school funding would grow to $2.8 billion a year by 2030, while local governments would pay a combined $1.2 billion more annually.
The Maryland Chamber of Commerce supports adequate and reasonable funding for all our students and educators. As always, the Chamber stands ready to work with all stakeholders to identify viable funding solutions that support a robust education system, but do not unintentionally create barriers for the employer community, which has long demonstrated its commitment to developing the next-generation workforce.
4. House approves school construction bill | On February 14, the Maryland House of Delegates overwhelmingly passed legislation to increase school construction by $2.2 billion across the state. The Built to Learn Act passed by a vote of 128-6 with all House Democrats and most Republicans supporting the measure. The funds would be distributed to counties over five years from bonds issued by the Maryland Stadium Authority. The bonds would be paid back over 30 years using $125 million a year in casino revenue set aside in the “education lockbox.”
5. Senate receives testimony on “Climate Solutions Act of 2020” | On Wednesday, the Senate Education, Health and Environmental Affairs Committee held a hearing on the Climate Solutions Act of 2020. The bill would: (1) change the state’s greenhouse gas reduction goal from 40% to 60% by 2030, aiming for net-zero emissions by 2045; (2) require the state to switch to an all-electric fleet of light-duty cars by 2030; (3) require a new building to be carbon-neutral if it receives 25% state funding or more; and (4) require new commercial buildings with more than 20,000 square feet of roof space to install solar energy systems; and (5) mandate the planting of 1 million trees a year.
The House version of the bill will be before the House Environment and Transportation Committee on March 4 at 1 p.m.
ICYMI: THIS WEEK’S ACTION ALERTS
- Link to SB 2 Action Alert
- Link to HB 839/SB 539 Action Alert
