In advance of March 12 General Assembly hearings on legislation to repeal the state’s pending new 6 percent sales tax on computer services, the Greater Baltimore Committee launched a web campaign urging the tax’s repeal. A new GBC Web page anchors the GBC’s online resources supporting its initiative to repeal the tax.
The GBC, the region’s most prominent organization of business and civic leaders, purchased banner web ads on the online sites of the Baltimore Sun and the Washington Post detailing many types of jobs in Maryland that could be lost because of the tax, which will take effect on July 1 if not repealed by lawmakers. The ads were designed by GBC-member Carton-Donofrio Partners, Inc.
“Our intention is to emphasize to Marylanders and state lawmakers who read these major online news sites that significant negative impacts on Maryland’s business climate will result from arbitrarily increasing the operating costs of information services firms – a major growth industry in our state,” GBC president and CEO Donald C. Fry said in a news briefing.
“The state’s own fiscal note on the computer tax confirms that it will place Maryland at a severe competitive disadvantage, not only in the mid-Atlantic region, but in the U.S. as a whole,” Fry said.
He noted that Maryland would have the 2nd highest tax rate on information services in the country, according to data cited by the state’s Department of Legislative Services. Among Maryland’s immediate neighbors, Virginia and Pennsylvania are among 38 states that do not tax information services.
Larry Fiorino, president and CEO of G.1440, a Baltimore-based information technology staffing and consulting firm, said the computer services tax will have a much broader impact on businesses than Maryland lawmakers may have realized when they passed the tax during the November 2007 special session.
Information services firms have narrow profit margins. Many can, and will, leave the state. Meanwhile, customers will divert their business to firms in other states with no taxes or minimal taxes, said Fiorino.
“It’s going to cost us jobs and will hurt everyone,” he said. “This is not about yuppies and geeks. It’s about the working single mom whose job moves out of state.”
When Maryland companies who buy computer services realize that they will be paying this tax, many of them, to reduce their tax bill, will replace their Maryland vendors with cheaper providers elsewhere,” said Tom Loveland, CEO of Mind Over Machines, Inc. and founder of the Maryland Computer Services Association.