While Maryland?s information technology businesses were thrilled by the Senate Budget and Taxation Committee?s vote Wednesday to repeal the 6 percent computer services tax, Larry Fiorino was surprised to hear IT customers were just as happy.
“A lot of these customers were not going to swallow that 6 percent,” said Fiorino, president and chief executive officer of G.1440, an IT consulting and staffing firm in Baltimore. “They were going to consider offshore providers and take a risk of working with a new company.”
The senators voted 10-5 to replace portions of the $200 million the tax was expected to generate with a three-year surcharge on incomes over $1 million, and moved $50 million out of the transportation fund. They also told the governor to come up with another $50 million in budget cuts. Several senators said they found the tech tax damaging to the state economy.
The repeal still has to be voted on by the full Senate and the House of Delegates.
“We?re cautiously optimistic,” Fiorino said. “The tech community in Maryland is an important part of the economic engine.”
The Greater Baltimore Committee, which has worked to see the repeal of the tech tax, opposed “making a raid” on the Transportation Trust Fund.
“The Transportation Trust Fund is not the state?s cookie jar where we store our extra cash,” said Donald Fry, president and CEO of the GBC. “It is a dedicated fund with a dedicated purpose, and shoring up the general fund is not it.”
Fry said pulling money from the fund adds to the state?s congestion and pollution problems. The total cost of congestion, in wasted fuel and hours motorists spend in traffic, is about $1 billion a year in the Baltimore area.
“This is poor policy and poor planning with a guaranteed poor outcome,” Fry said. “It is inappropriate, and the business community can not support it.”
The Tech Council of Maryland welcomed news of the committee?s vote.
“This is very important to Maryland?s economy,” Julie Coons, CEO of the Tech Council, said in a statement. “We will continue to work aggressively to protect the future of Maryland?s technology jobs.”
