Tech tax alternatives negotiated

WBAL.com

Governor O’Malley met for about 50 minutes tonight with legislative leaders regarding whether to repeal the state’s sales tax on computer services.

The extension of the state’s 6% sales tax is due to take effect in July, though the governor and a number of legislators want the tax repealed, noting it might drive computer consulting and software companies out of Maryland.

Senate President Mike Miller, who attended the meeting, told reporters afterwards that “nothing is off the table,” in terms of alternatives to the tax.

Miller says if the tax is going to be repealed, the state is going to have to find another way to make up the $200-million the tax will generate.

Miller doesn’t like the idea of transferring money from the state highway fund to replace the shortfall in the budget that the repeal of the computer tax would cause.

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Miller thinks if that transfer occurs lawmakers may be forced to raise gasoline taxes next year, and Miller said that “no one wants a gas tax increase, when gas prices are nearing $4-a-gallon.”

During the special session, lawmakers allocated $400-million generated from a sales tax increase to go to the highway fund which Miller says “was neglected by the two previous administrations, Republican and Democratic.”

Other senators see this one time transfer as an alternative to raising the income tax rate for some Marylanders.

A bill in the Senate would raise the tax rates for those earning more than $750,000 per year.

That increase is opposed by many Democratic senators from Montgomery County, which is the state’s wealthiest, because if would impact that county the hardest.