Tax proposal would decrease Maryland sales tax, but increase services taxed

BALTIMORE - A tax proposal introduced in Maryland's House of Delegates would aim to lower the state's sales tax from six percent to five percent. However, the bill is bundled with a series of new taxes on services.

House Bill 1515 expands the state sales tax to 10 categories, across a broad range of services like legal and accounting services, dry cleaning, and even funerals.

"I intended House Bill 1515 as a bit of a conversation starter," bill sponsor David Moon, (D) Montgomery Co., said. "We're left with few other options. We could increase the sales tax rate. That is even more regressive. We could engage in cuts."

Del. Moon cites the state's revenue shortfalls and funding priorities in education as reasons lawmakers need to consider tax changes.

"It is inconsistent from a policy perspective we have decided to charge a sales tax on shampoo, but not spa treatments," Benjamin Orr from Maryland Center on Economic Policy said.

The bill attracted dozens to Annapolis Monday in opposition.

"Maryland doesn't necessarily have a revenue problem. It has a spending problem," restaurant owner Greg Brown said.

Republican lawmakers sparred over services like funerals being considered for revenue generation.

"There's two things certain: taxes and death. Now, they're going to get money out of my pocket when they put me in the ground," Del. Robert Long of Baltimore Co. said.

Del. Moon conceded many services should be reviewed and the bill should be open for amendments.

"You raise the issue, should we pull 'death taxes,' I don't like the sound of that. So, sure, throw that on the chopping block. Sure. These are the conversations we need to have," Del. Moon said.

The bill faces political challenges this session in the Senate and from Gov. Moore, whose budget did not contain any tax increases.