The House Ways & Means Committee is hearing a number of tax bills today, including HB 11, which would expand the sales tax to cover many professional services, including:

• Management and business consulting services
• Engineering services
• Tax preparation services
• Public relations services
• Recruiting and staffing services
• and many more

Maryland Chamber lobbyists are still at the hearing, but here is a copy of our position statement on HB 11. Contact the Ways & Means Committee today and urge them to oppose this bill. We’ve posted more details in our legislative action center here. Login and the system will let you send an email to the entire committee. A sample letter is available or you can write your own.

The Maryland Chamber strongly opposes this bill because it would:

Hurt Small Business: Almost ¾ of Maryland’s 140,000 registered businesses have fewer than 10 employees. These small employers will be impacted the most by the proposed tax. Large companies are able to hire employees to perform many of the services listed in the bill, such as engineering, tax return preparation, public relations, management consulting, and others, and they would not pay sales tax. But small businesses usually hire outside companies to perform these services, and therefore would 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.