Business groups are gearing up to fight various components of Gov. Martin O?Malley?s slowly emerging plans to raise sales, income and corporate taxes ? though they don?t always agree on which taxes they don?t like.
In Annapolis on Wednesday, a new coalition of 11 organizations representing various commercial estate interests started their campaign against what they fear may be components of O?Malley?s deficit-busting solution.
“We?re all for closing the deficit. We understand the need for that,” said Michael Federici, president of Kay Management, a Silver Spring property management company, who chairs the Real Estate Maryland coalition.
The group, which includes shopping center owners, opposes expanding the sales tax to other services, particularly property management. O?Malley told legislators Tuesday that in addition to raising the sales tax to 6 percent, he wanted to narrowly expand it. Communications director Steve Kearney said that expansion would not be for essential services, such as haircuts and car repair, but for “luxury” items. No further details have been released.
Federici said his group favors a more broad-based tax such as the income tax, which is also part of the O?Malley plan. “Everybody is part of the problem, so they need to be part of the solution,” Federici said.
The 600-member Maryland Retailers Association, on the other hand, wouldn?t mind broadening the number of services Maryland taxes in lieu of just raising the current tax.
“We don?t think the sales tax provides a fair or a long-term solution,” association President Tom Saquella said. “It?s regressive. It?s taxing a smaller and smaller portion of consumer spending. The sales tax now captures less than 40 percent of what consumers spend their money on.”
Retailers are already losing money to online shopping, where federal law prohibits sales taxes; to Delaware, which has no sales tax; and Pennsylvania, which doesn?t tax clothes, Saquella said. “You?re raising taxes on a declining base.”
This afternoon, a coalition of major business groups organized by the Maryland Chamber of Commerce will release a new Ernst & Young study on the economic impact of new taxes.
“It will provide information that no one has ever seen before,” said Karen Syrylo, the chamber?s tax consultant. The study will show how “the entire state economy is going to be impacted.”
An Ernst & Young study for the chamber three years ago found that businesses pay 40 percent of Maryland sales taxes and that tax increases on higher incomes ? another O?Malley proposal ? disproportionately affect small-business owners, who make up the bulk of Maryland companies.
