Maryland Ways and Means hears hours of opposition to 2.5% business-to-business services tax bill

Delegate David Moon, the bill sponsor, told the House Ways and Means Committee on March 12 that House Bill 1554 would create a 2.5% tax on business-to-business services as one option to address looming budget shortfalls and shifting federal funding. “I am not here to push this particular plan on you,” Moon said, “but it did seem prudent to add options to the table.”

The bill prompted nearly four hours of testimony and extensive questions about scope, implementation and economic impact. Moon framed the proposal as a sales-tax‑style expansion aimed at business purchases; Deborah Gorman, director of the legal division at the comptroller’s office, told the committee the office could implement the bill’s sales-tax model by the proposed effective date and was available to answer technical questions. “We can implement by the implementation date,” Gorman said.

Why it matters: The state is confronting a multi‑hundred‑million dollar revenue gap and officials have proposed a mix of cuts and revenue changes. Moon and other lawmakers said the panel needed additional options as revenues and federal supports shift; opponents argued the proposal would slow growth and worsen affordability across Maryland. The hearing drew dozens of trade associations and hundreds of witnesses representing hotels, manufacturing, technology firms, accountants, trucking and property industries.

What the bill would do and key uncertainties - Structure: HB 1554 would impose a 2.5% tax on certain business‑to‑business services, implemented through the state’s existing sales‑tax framework. Sponsor testimony and the draft fiscal analysis treated the measure as a sales tax on specified services rather than a gross‑receipts levy. - Scope questions: Committee members and witnesses repeatedly noted…