Baltimore City Council proposes local sales tax to alleviate property tax burden

In a recent meeting of the Maryland General Assembly's Ways and Means Committee, a significant proposal was discussed that could reshape Baltimore's financial landscape. House Bill 1508 seeks to empower the city’s mayor and council to implement a local sales tax on retail sales of tangible personal property and taxable services, capped at 2%. This initiative aims to generate approximately $69.3 million annually for the city, providing a much-needed alternative revenue source.

Currently, Baltimore is one of only three major independent cities in the United States, alongside St. Louis and Carson City, which limits its ability to benefit from county-wide resources. Unlike many of its peer cities, which derive a substantial portion of their general fund from local sales taxes, Baltimore relies heavily on property taxes, with 49% of its general fund coming from this source. This reliance contributes to some of the highest property tax rates in the state, creating a financial burden for residents.

The proposed sales tax would not only align Baltimore with other states that utilize local sales taxes but also help alleviate the financial strain on residents by redistributing some of the tax burden to visitors who enjoy the city’s cultural and tourist attractions. The Baltimore City Administration emphasized that this change is crucial for addressing infrastructure needs and providing property tax relief, especially as the city faces significant budget challenges and uncertainties regarding federal funding.

The committee's discussion highlighted the importance of diversifying revenue sources to ensure the city can maintain essential services and improve overall quality of life for its residents. As the proposal moves forward, it could mark a pivotal shift in how Baltimore finances its operations and supports its community.