The following article was submitted Delegate Bob Long about Maryland’s proposed Business to Business Tax and how it is a step in the wrong direction for businesses and consumers
The Maryland General Assembly is currently considering House Bill 1554, a proposal that would drastically alter the state’s tax landscapel.
The bill aims to expand the definition of taxable services to include a wide range of business-related activities, including accounting, consulting, data services, and more.
Many experts and local business leaders are raising concerns about the negative impact it would have on Maryland’s economy, consumers, and the business community. I side with them and will absolutely not be supporting this bill. This proposed tax comes at a time when small businesses are already struggling to stay afloat amidst rising costs.
In committee, I emphasized that the Governor claims to be adamant about bringing businesses to our state, but this bill would do the opposite of that. I also made it known to the sponsor of the legislation that some of these small businesses are already operating on razor-thin margins, meaning they simply cannot afford this new tax.
Many small businesses rely on services like bookkeeping, marketing, and IT consulting to stay competitive.
By imposing a 2.5 percent sales tax on these services, the state risks stifling growth and innovation in its small business sector.
Small business owners will have to factor in this additional cost, which could make it harder for them to compete with larger companies that can absorb these expenses more easily.
I also emphasized the fact that consumers will feel the pain of this tax expansion, as the burden will surely be passed onto them. Services that were previously exempt from the sales tax will now carry an additional charge, raising the cost of everything from professional consulting to landscaping.
For households already managing tight budgets, this added expense could push services that are essential for daily life—such as financial planning or home maintenance—out of reach.
Imposing new taxes on services would also have long-term consequences for Maryland’s economy.
As businesses are forced to spend more on services to remain competitive, they may cut back on hiring, investment, or expansion plans. Increased operational costs could also lead to higher prices for consumers, contributing to inflationary pressures.
The proposed tax changes would deter potential new businesses from setting up in Maryland, especially as nearby states with more favorable tax environments become more attractive.
In the age of remote work and interstate commerce, businesses have more freedom than ever to choose where they want to operate, and Maryland’s increasing tax burden may make it a less desirable location for business owners.
This bill would incentivize businesses to leave Maryland and would dissuade businesses from moving to Maryland.
