Business representatives were surprised Tuesday afternoon when the Senate Budget and Taxation Committee proposed that Maryland start taxing computer services and landscaping services.
“Everybody was totally shocked,” said Karen Syrylo, tax consultant to the Maryland Chamber of Commerce. “They have never been part of a bill that has been subject to a hearing.”
Gov. Martin O?Malley had proposed a tax on health club fees and real estate property management, but those proposals were removed from the bill after providers and consumers protested. The House Ways and Means Committee held a hearing Saturday on a bill that would tax 31 additional services. But computer services and landscapers were not on this list.
Budget Committee Vice Chairman Ed Kasemeyer said the tax on computer services was among many on a long list of services that the committee was working from.
The new tax on these services, as well as video arcades, would bring in $300 million, and raising the sales tax from 5 to 6 percent on all purchases would raise close to $700 million.
“There is no other state that taxes computer servicesas broadly as what is in this language,” Syrylo said.
Pennsylvania repealed a tax on computer services in 1997, “because they found it was extremely unworkable and difficult to administer.”
Sen. Bobby Zirkin, D-Baltimore County, was puzzled by the “very vague” definition of computer services in the bill. Zirkin told The Examiner on Wednesday that taxing computer services is “seriously, legally problematic. You will see lawsuits on this one.
“I think taxing services is a bad idea in general,” Zirkin added. “There are so many layers of complexity with services.”
Syrylo said she has heard that telecommunication companies would be heavily affected by the bill, because of all the computer systems they use.
“This is a bill that would be very harmful to consumers and business,” said Sandra Arnette, spokeswoman for Verizon. “We?re definitely concerned about this bill.”
