Legislative Report -- February 27, 2008

Hundreds Rally for Tech Tax Repeal
Hundreds of business people gathered in Annapolis yesterday to advocate the repeal of the computer services sales tax, which will take effect July 1.

“I think this is wonderful,” Senate Deputy Majority Leader Rob Garagiola (D-Dist. 15) said. “I’m shocked, actually, by how many people are here.”

A capacity crowd filled the Maryland Inn for a media briefing, where a group of business people outlined how the tax will impact Maryland businesses and the state’s economy.

“Martek Biosciences is a $300 million biotech company in the State of Maryland. When we invest in information technology, we do it to improve our efficiency, to improve our effectiveness, and we do it to improve our competitiveness on a global landscape,” said David Ronis, Martek’s Chief Information Officer. “We have operations in four states around the country. I don’t think legislators realize just how easy it is to relocate outside of the state.”

“We have about 200 employees in Maryland in our Montgomery County office. We also have offices in California, Washington State, and we’re about to open an office in Northern Virginia,” said Gail Bassin, Chair of the Board/Treasurer of JBS International. “This use tax on IT services will definitely harm our business in Maryland.”

Larry Letow, President and COO of Convergence Technology Consulting voiced his concern over the impact the tech tax will have on emerging technology companies. “The tech community is largely based on companies that started small and grew. We need IT companies, especially small businesses, to focus on growth, not to focus on survival.”

Business people in attendance were also joined by a bi-partisan group of legislators, who vowed to work together to repeal the computer services sales tax.

“Legislators are going to have to find the courage to do the right thing here and repeal this tax, which never should have been implemented to begin with,” said Del. Jeannie Haddaway (R-Dist. 37B). “We realize how important it is to your businesses. We realize the affect it’s going to have on small businesses.”

Lawmakers also urged business people to keep the pressure on their lawmakers. “I’m convinced that this type of event is the only type of activity that will convince the legislature and the executive branch to repeal this tax, House Minority Leader Del. Tony O’Donnell (R-Dist. 29C) said. “We need you to continue to pump up the volume and continue to put the pressure on. We need your letters, your emails and your calls.”

“You all need to keep the pressure on. How is it impacting your businesses? Are you making alternative plans of moving if this goes into effect? That’s the kind of message that needs to be told to our legislators,” Sen. Garagiola said.

The Maryland Chamber coordinated the day’s program with the Fight The Tech Tax Coalition, which includes the Tech Council of Maryland, MCSA and 41 other chambers and organizations.

Senate to Hear Tech Tax Bills on March 12
The Senate Budget and Taxation Committee will hear the computer services sales tax bills on March 12 at 2 p.m. The House Ways & Means Committee will hear the House bills on the same day at 1 p.m. If you care about this issue, please mark March 12 on your calendars. We will need a huge business presence in Annapolis for the hearings.

MD Chamber Opposes Discriminatory Property Tax Changes
The Maryland Chamber strongly opposes legislation (HB 676) that would authorize each county to establish classes of real and personal property and impose varying rates of taxation on each class.

“A minority of states authorize local government to impose differential tax rates on varying classes of property. Such laws always result in local governments imposing discriminatory and burdensome levels of taxation on business property, sometimes at levels two to three times the level for residential property,” said Ron Wineholt, the Maryland Chamber Vice President of Government Affairs, who will testify today before the House Ways & Means Committee.

Since at least 1929, state law has required counties to impose one rate of taxation on all property. The only exceptions to this longstanding policy occurred in 1975, when tax differentials for municipal areas were authorized, and in 2000, when a separate rate of tax was authorized for business personal property as part of the conversion to full value real property assessments.

Maryland businesses will already pay approximately $760 million of the $1.4 billion in new taxes enacted during the 2007 special session. With economic indicators suggesting a possible recession, the last thing employers need is even higher levels of property taxes.

To read the Chamber’s complete position statement, click here (pdf). For more information, contact Ron Wineholt at rwineholt@mdchamber.org.

Legislation Would Moderate Onerous Corporate Reporting Requirements
During the November 2007 special session, the Maryland General Assembly passed legislation creating the Maryland Business Tax Reform Commission. The Commission will review and evaluate the state’s current business tax structure and make recommendations for changes. Policies to be studied include mandatory unitary combined reporting, gross receipts taxes, value added taxes, alternative minimum taxes, and more.

While the Maryland Chamber was pleased the study arose as an alternative to mandatory unitary combined reporting, the legislation as drafted goes beyond what the government needs to do further analysis. As part of the study, the legislation imposes extensive new reporting requirements on corporations. No other state imposes reporting requirements that are this extensive.

The Maryland Chamber strongly supports legislation, SB 444/HB 664, which would reduce the most onerous and unnecessary aspects of the reporting requirements, while still enabling the commission to gather the information the State needs.

Both bills will be heard on March 12. For more information, or if you would like to get involved in the Chamber’s efforts to promote passage of SB 444/HB 664, contact Karen Syrylo at ksyrylo@mdchamber.org.

Visit www.mdchamber.org for More Legislative News
With the 2008 General Assembly session underway, it is critically important that business people stay informed and engaged. Visit www.mdchamber.org to access a wealth of information and resources, including:

• Chamber Blog: The Maryland Chamber Blog is updated daily with news and resources important to Maryland’s business community. To join the conversation, click the comment link under any post.
• Bill Positions: View Maryland Chamber bill positions, including a brief summary of the legislation and a summary of the Chamber’s position. As the bills are heard in committee, we will also post complete position statements.
• Legislative Alerts: Alerts are posted online when immediate contact is needed to sway an issue. Talking points, phone scripts and sample letters will always be available. Action can be taken in minutes.

Upcoming Committee Meetings

March 3, 2008
Legislative Committee
MD Chamber of Commerce
60 West Street, Suite 100, Annapolis, MD 21401
3 p.m.

March 6, 2008
Environment Committee
MD Chamber of Commerce
60 West Street, Suite 100, Annapolis, MD 21401
8:30 a.m.

Upcoming Events
March 5, 2008
Membership Drive Kickoff Event
Sports Legends Museum at Camden Yards
301 W. Camden Street
Baltimore, MD 21230
5:30 p.m.
For more information, visit click here.

April 22, 2008
Annual Membership Meeting &
Business Hall of Fame Awards Dinner
Hyatt Regency Baltimore
300 Light St
Baltimore, MD 21202
5:30 p.m.
For more information, click here.