What is the Computer Services Tax?

• Legislation passed during the 2007 special session to expand the state's 6 percent sales tax to include computer services.
  
  
• The tax will take effect July 1 if not repealed
  
  
• GBC strongly supports the repeal of the computer services tax before it can do potentially serious damage to Maryland's business growth.
  
  
• A significant unintended consequence of Maryland's new computer services tax surfaced when information technology firms in our state reported receiving solicitation letters from economic development agencies in Pennsylvania and Delaware.
  
  
• Recipients included some members of the GBC Technology Committee and at least one GBC board member. While the letters don't specifically refer to the computer services tax, they invite Maryland IT companies to consider "expanding" to their states.
  
  
• There are more than a dozen bills before the General Assembly that would either repeal or alter the computer services tax. One of the repeal bills -- HB 196 -- has 72 co-sponsors, which constitutes a majority of the House of Delegates.
  
  
• View current legislation to repeal the computer services tax

Facts about Maryland's computer services industry

• Maryland's approximately 6,000 computer services firms employ almost 62,000 workers at an average annual salary of more than $85,000
  
  
• Maryland has a larger share of total employment in computer services and data processing than all states except Virginia and the District of Columbia
  
  
• In terms of raw numbers, Maryland ranks 6th in terms of computer systems design and related services employment
  
  
• Computer services and data processing employment in Maryland represents 2.4 percent of all Maryland-based employment, compared to the national average of 1.1 percent
  
  
• Maryland's computer services industry is an integral part of our state's larger high-tech industry that employs more than 162,000 tech workers with a combined payroll of $12.5 billion

March 12 hearing on computer tax repeal

• 10 House bills are scheduled to be heard on March 12 by the House Ways and Means Committee
  
  
• GBC will be there to urge lawmakers to repeal this tax on Maryland's technology business sector that is a critical building block of economic growth and one that we are working hard to attract
  
  
• At least three bills would repeal the tax altogether, including HB 196, which has 72 co-sponsors. Other bills would amend the tax, including proposals to exempt from taxation computer services used in any production activity, research and development, internet-based publishing, or for government contracts.
  
  
• Among the Senate bills is SB 567, sponsored by Montgomery County Senator Rob Garagiola and six other senators, that includes both a repeal of the computer services tax and an alternative revenue increase to compensate for the $200 million the tax is estimated to generate. Garagiola's bill would, in effect, repeal the computer services tax and replace the lost revenue by increasing the gasoline tax, which would go to the Transportation Trust Fund. The bill would then decrease the amount of sales tax revenue that's dedicated to the Transportation Trust Fund and restore it to the General Fund, thereby replenishing the revenue lost by the computer tax's repeal.