Business Leaders: This Tax Does Not Compute
BuBusiness leaders caught off guard by the late-emerging decision at last week's special legislative session to apply the sales tax to computer services say they'll be back for a fight when the General Assembly reconvenes in January.
"We'll try to overturn the tax," said Ronald W. Wineholt, vice president of government affairs for the Maryland Chamber of Commerce, whose members include about 20 computer companies.
Computer consulting, programming, hardware maintenance and software installation were previously exempt from the sales tax. But when lawmakers increased the sales tax from 5 to 6.percent, they also eliminated the exemption for computer services.
The industry was an easy target for lawmakers who approved a $1.4.billion tax package during the three-week special session to close a budget deficit: Taxing computer services could generate as much as $200.million a year from an industry with little clout in Annapolis. Public outcries banished landscaping, gym memberships, video arcades and other services with strong lobbies from the sales tax expansion proposal.
"There was never an adequate public hearing on this," Wineholt said of taxing computer services. He called the tax "a stake driven through the heart of high-tech" business in Maryland.
The repeal effort is likely to get attention, but its chances of success seem slim, given the amount of money involved.
"If there are some issues that need to be dealt with during the regular session, I'm sure the governor would be willing to consider them," O'Malley spokesman Rick Abbruzzese said. But he quickly questioned the General Assembly's appetite for revisiting a tax package that most lawmakers want to put behind them.
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