Business people from across the state filled the House Ways & Means Committee yesterday for a hearing on HB 1051, which would apply Maryland’s sales tax to 29 additional services. Business services covered in the bill include tax preparation, management and business consulting, public relations, photographic services, real property management, testing labs, staffing services, drafting, business brokerage service and more.
“I am very proud to say that since 2006 I have not raised my hourly rate. I’ve pared down the expenses I can control to offset the expenses I can’t control,” said Christine Walters of FiveL Company. “I would very respectfully ask and expect my state to control fiscal responsibility and expenses with the same commitment to me and to Maryland’s small business community as I have to my clients.”
Maryland Chamber Vice President of Government Affairs Ron Wineholt presented the Chamber’s opposition during today’s hearing. In economic times like these, Maryland government should be focused on creating a climate to foster economic growth and job creation. Extending the sales tax to professional services would hinder economic growth, cripple job creation and make Maryland less competitive.“This bill would really nail small businesses in two ways, not only in the services they are providing, but in the services they are buying,” Wineholt said.
Montgomery County Chamber President & CEO Gigi Godwin agreed, calling the legislation a “double whammy” against small business. “Many of Maryland’s service companies provide their services to other businesses. Taxing services would not only raise the cost for the buyer of the services, but would also make the seller of those small business services less competitive,” Godwin said.
Allen P. DeLeon, founding partner of DeLeon & Stang CPAs & Advisors urged lawmakers to reject the bill because of the negative impact it would have on his clients. “As a CPA in Maryland, we think this puts our clients at a disadvantage since we will be charging sales tax on necessary business services, where our competitors in neighboring states are not.”
Jennifer Wise, President of Wise Consulting said that she usually lets the Maryland Chamber fight proposals like these. But, at a time when her business is growing again, she felt it was important that she took time away from her business to testify at the hearing.
“We compete on a national level. When our competition is in states that do not require taxation, this is absolutely something I will not be able to pass on to my clients. This will absolutely hit my bottom line,” she said.
You can view the Maryland Chamber’s position statement on HB 1051 here. We encourage you to contact your lawmakers to let them know how expanding the sales tax to professional services would impact your business. Take action now.