The Budget Reconciliation and Financing Act of 2012 (BRFA) includes several provisions that the Maryland Chamber opposes, including digital downloads tax and online sales tax proposals.
Maryland Chamber Vice President of Government Affairs Ron Wineholt will present the Chamber’s testimony on portions of the bill during hearings in the Senate and House Wednesday and Thursday, February 29 and March 1. Here are some highlights of the Chamber’s positions. You can view the complete position statement here.
Digital Downloads Tax: The bill includes a vague but sweeping extension of the sales tax to any product that is electronically downloaded. The expansive tax would impact products that are downloaded, but also make digital products produced by special order a taxable service.
Online Sales Tax: The proposal to require out of state vendors to collect Maryland sales and use tax for online sales is likely unenforceable, of questionable constitutionality and guaranteed to be challenged for years in court. The Maryland Chamber believes that action by the U.S. Congress is necessary to set reasonable standards for minimum nexus in order for states to impose sales taxes. Until then, Maryland could adopt tax changes that will enable it to participate in the Streamlined Sales Tax Agreement. Two dozen other states have adopted conforming changes to simplify their sales tax laws, enabling them to collect hundreds of millions of dollars in taxes from remote sellers.
Other issues in the BRFA that concern the Maryland Chamber include:
Increases in Individual Income Tax: The Chamber opposes the individual income tax changes in the BRFA. Most Maryland businesses pay their income taxes through the individual income tax because they are organized as LLCs and S Corporations.
Raid on IWIF Funds: The Chamber opposes bill would transfer $50 million from IWIF to the state’s general fund. The Chamber believes that the money belongs to policy holders, not the state.