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December 26, 2007

Editorial: Mystery Tax

The Capital ran the following editorial on December 21:

Mystery tax

PERHAPS IT’S no surprise that a coalition, Ax the Tech Tax, has already formed to advocate repeal of the new sales tax on the computer services industry - a levy hastily passed by the General Assembly in last month’s special session.

What is surprising is that the group has the backing of Comptroller Peter Franchot - Maryland’s chief tax-collector. Mr. Franchot says the experience of other states proves that this tax is difficult to define and enforce, and that by the time officials pinpoint something that can be taxed, those businesses have generally fled the state.

Didn’t anyone ask Mr. Franchot about this before the legislature passed the tax? Perhaps not - the public hearing on this flew by so quickly that a lot of the affected business owners never found out about the proposal.

The legislature resorted to this tax because it rejected the governor’s idea of clamping the sales tax on some luxury services, including tanning salons. So tanning salons are more important to the state economy than computer services?

The Maryland Comptroller’s Office has formed a task force to figure out how to enforce this tax. We wish it luck - but, as they say repeatedly in the “Star Wars” movies, we’ve got a bad feeling about this.

Maryland Comptroller Peter Franchot did send House Speaker Michael Busch a letter during the special session. You can view it here.

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