Maryland-based technology firms are joining together to repeal the state’s new 6 percent computer services tax — a tax they say will hurt Maryland technology firms.
The Maryland Chamber of Commerce, which launched the Web site FighttheTechTax.com with the Tech Council of Maryland, has “a statewide grassroots effort underway,” said Will Burns, the Chamber’s communications director. The group — whose members include more than 30 companies, local chambers and associations — plans advertising, outreach to member companies and coordinated lobbying efforts.
“This is much more than a tax on the IT industry,” said Thomas Loveland, co-founder of MarylandNeedsIT.org, a second anti-tax coalition.
The tax would be passed onto other small businesses, said Loveland, who is the chief executive officer of tech company Mind over Machines in Owings Mills. It is also a sales and use tax, meaning companies based in Maryland may have to pay taxes on services they receive regardless of where the vendor is based.
The language is also unclear, say businesspeople, and the regulations haven’t been fully drafted yet by the comptroller’s office.
“It’s a bureaucratic nightmare for the average company to figure out what’s taxed and not taxed,” said David Fraser-Hidalgo, co-founder and principal of Kensington-based Web development company Sandglass. It’s also not definitively known whether Maryland-based companies would have to tax subcontractors in federal contract deals as well as companies they service outside of Maryland.
As the coalitions are pushing for a full repeal of the tax, Maryland legislators are looking to alternative sources for the estimated $200 million the tax is supposed to generate.
Sen. Rob Garagiola has proposed a 3- to 4-cent gas tax increase for two years, which he said will generate about $32 to $33 million for each penny — and could exceed $250 million if an 8-cent tax were implemented.
The computer tax would result in less revenue, said Garagiola, who thinks that businesses would leave and the state would lose “high-quality, good-paying jobs.”
Maryland’s tech industry has an annual payroll of $5.2 billion, according to the Maryland Chamber of Commerce.
But the gas tax increase is a “tough sell,” in light of already high energy prices, said Burns, who noted the Chamber is looking into other options.
“We’re going to look at this issue under an electron microscope,” said Majority Leader and Montgomery County Del. Kumar Barve.
Barve, who is also chairman of the revenue subcommittee for the House Ways and Means Committee, called a gas tax a “nonstarter” but said he is working to finding some alternative to the computer tax.
“I consider it to be a top priority for me.”
