At least two Montgomery county legislators plan to sponsor measures to scrap or soften plans to apply Maryland’s 6 percent sales tax to computer services in the legislative session that begins in Annapolis today.
State officials projected extending the sales tax to computer services such as Web design, software installation and computer repair would generate about $200 million a year in the effort to help close a $1.7 billion budget gap, but opponents say it puts Maryland at a competitive disadvantage for high-tech work.
“Look at the I-270 corridor, it’s loaded with tech companies that do a variety of things, writing programs, installing software and systems — all of that would be taxed,” Mike Wendy, spokesman for the Computing Technology Industry Association, said. “All these business will have to either eat the tax, pass it on to consumers or move.”
Sen. Nancy King said she plans to introduce a bill that would exempt businesses working on government contracts from paying the tax. King’s colleague, Sen. Rob Garagiola, wants to ditch the tax on computer services entirely, and replace the loss in funds by adding 3 to 4 cents per gallon per year to the gasoline tax for the next two years. Lisa Fadden, vice president for public affairs for the Montgomery County Chamber of Commerce, said the state could lose income tax revenue if it sticks with plans to apply the sales tax to computer services and firms move.
Majority Leader and Montgomery County Del. Kumar Barve said as chairman of the revenue subcommittee for the House Ways and Means Committee, he will ask his committee to “specifically relook” at taxing computer services.
“Everybody wants to repeal the tax,” Barve said. “The question is where you are going to find the $200 million a year to make up the difference?”
