The Baltimore Sun: Expanding state sales tax to pay for school improvements would ‘destroy our economy,’ Maryland Gov. Hogan says

By Pamela S. Wood and Emily Opilo
Feb. 20, 2020

Maryland Gov. Larry Hogan vowed Feb. 20 to oppose a proposed change in the sales tax that would reduce the rate but expand who pays it by charging it on an array of services from landscaping to lawyers.

“It’s not ever going to happen while I’m governor, I can promise you,” the Republican governor said during a State House news conference.

Democratic lawmakers introduced a bill earlier in the day to expand the sales tax, saying that would raise the billions of dollars needed to improve public schools while having a minimal impact on most Maryland families. The rate would drop from 6% to 5%, but the tax would apply to a vastly broader range of business and services transactions.

The estimated $2.6 billion per year the expanded sales tax would generate would be earmarked to pay for school improvements recommended by the Kirwan Commission, such as increased teacher pay, expanded prekindergarten and more support for schools in low-income neighborhoods. Lawmakers have spent the first half of the 90-day General Assembly session weighing proposals for how to raise money for the Kirwan recommendations.

“The bottom line is: This is one way we can fully fund our schools,” said Del. Eric Luedtke, a Montgomery County Democrat who is the bill’s chief sponsor.

Luedtke said the bill doesn’t break an earlier pledge from the General Assembly’s Democratic presiding officers that they would not approve an across-the-board sales tax increase.

“The leadership pledged we wouldn’t increase the rates,” Luedtke said. “In this bill, we’d be lowering the rates. That would put us below every neighboring state, except Delaware.”

Delaware does not impose a state sales tax.

Hogan blasted the sales tax proposal during his news conference. He said collecting more sales tax would erase economic gains made in the state during his tenure as governor.

“This would destroy everything we’ve done for five years,” Hogan said. “It would destroy our economy.”

The Maryland State Bar Association is “vehemently” opposed to the proposed tax, said executive director Victor Velazquez, who argued it would run “counter” to due process rights in the U.S. Constitution. Legal services are unlike other services because clients are paying to have their rights represented and advocated for, Velazquez said.

“Certainly, access to justice is impacted,” he said. “If someone who is injured gets a settlement for compensation, to then have to pay taxes on that settlement is counter to everything reasonable in the eyes of the public.”

Velazquez said the association’s legal team is reviewing the language of the proposed bill, but the proposal is particularly concerning because it’s “wrapped in the cloak of the Kirwan Commission.”

“The objective seems applaudable and we take no position on it,” said Velazquez, referring to the educational recommendations. “But we don’t want this to just be incorporated in large omnibus legislation that has the impact of raising taxes for the public.”

Donald C. Fry, president and CEO of the pro-business Greater Baltimore Committee, expressed concern that “significant tax reform of this magnitude” was introduced without enough time for discussion. He suggested instead that lawmakers form a commission to study potential changes in the tax code.
To read the full story, visit The Baltimore Sun’s website.