The House Ways & Means Committee will hear HB 448 next week, on March 14. This is the bill that would expand Maryland’s sales tax base to cover a large list of professional services. Services mentioned in the bill include:

• Management and business consulting services
• Engineering services
• Tax preparation services
• Public relations services
• Recruiting and staffing services
• And many more. For a complete list of the services impacted by the bill, view a copy of the legislation here (pdf)

Defeating this legislation is a priority for the Maryland Chamber. The Maryland Chamber opposes this legislation, because it would:

Hurt Small Business: Maryland is a small business state. More than 50 percent of private sector jobs are created by small companies. Expanding the sales tax to professional services hurts these small and growing companies the most. Large companies hire employees to perform many of the services outlined in the bill. Small businesses are more likely to hire outside companies to perform these services, and therefore would be more likely to pay the proposed sales tax.

Damage Maryland’s Competitive Posture: Most of the services this legislation proposes to tax are not taxed by our regional competitor states. Expanding the sales tax to these services will be harmful to Maryland’s business climate. No Maryland business, or consumer, is more than 45 miles from another state.

Cause Administrative Nightmares: There is a reason most states don’t attempt to impose a sales tax on services. It is almost impossible to administer. Consider the nightmare of trying to identify where the taxable transaction took place. For example, what if a Maryland-based engineering company is working for a client headquartered in Virginia on a project for the client’s location in North Carolina. Is the sales tax in Maryland, Virginia, or North Carolina? This sort of problem caused Florida to repeal its broad services sales tax just a few months after it had been enacted.

To contact your legislators and urge them to oppose this bill, click here. Talking points and a sample letter are available. For more information, or if you would like to testify at the March 14 hearing, contact Karen Syrylo at (410) 269-0642, (301) 261-2858 or ksyrylo@mdchamber.org.