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Maryland Sales Tax Increase In The Works

  • Jan 20, 2012 | Susan McLain

Wednesday, Maryland governor, Martin O’Malley, presented his 2013 budget. The budget is reported to close “…a gap of approximately $1 billion; includes $800 million of reductions; and makes investments in job creation and innovation, skills and education, health care, public safety, and sustainability.”

As part of his proposed program, the Governor is proposing a 1% increase in sales tax in lieu of or in addition to a proposed 15-cent increase in gas tax. The gas tax increase has been “…poorly received by many residents.”

Although “the governor is expected to throw his support behind increasing the state’s 23 ½ cents a gallon gas tax..., [he] unexpectedly floated a sales-tax increase during a morning radio interview and while speaking later with reporters.” The Washington Times reports that he says “…increasing the sales tax would bring the state hundreds of millions of dollars in revenue, and could be a viable option if the assembly struggles to raise the gas tax, which has gone unchanged since 1992.”

The Washington Times continues, “Lawmakers last raised the sales tax during the 2007 special session, when Mr. O’Malley led an effort to increase it from 5 percent to 6 percent.” According to Mr. O’Malley, “No one in our state lost a house, lost a job or lost a business because of the additional penny on the sales tax….These bridges don’t build themselves….If we want to build a better country for our kids, that’s how we have to do it.”

WTOP recorded some business owner responses to the sales tax hike being considered:

"Any tax increase will only accelerate the departure of businesses from the state...";

"A 1-cent tax increase will pose problems for small businesses...";

"Having to [raise taxes] again will mean that 'you will have to change your whole way of talking to people and tell them taxes are gone up....'"

According to one business owner, "Increasing the tax often falls short of desired results because purchases in the state decrease, so the state is forced to raise it again...."

It appears that the Maryland legislature has much to consider in the coming months as they define, refine and pass the 2013 budget.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Susan McLain
Avalara Author Susan McLain
Susan McLain began her career as a technical writer in technology industries such as satellite networking and medical devices. Her skills encompass technical and marketing writing, usability engineering, verification and validation testing and protocol writing, requirements development, business analysis, technical illustration/graphic design and marketing. She has owned her own business providing service to small to medium sized business and in other positions, she has been in project management, documentation and marketing. She is currently the content specialist for Avalara helping to “make sales tax less taxing.”