03/14/2007
CONTACT: Ellen Valentino, (410) 693-2226 or Mike Diegel, (202) 314-2004
ANNAPOLIS, Md. -- The Maryland Legislature should not attempt to balance the budget on the back of small businesses, according to testimony heard today from a representative of the National Federation of Independent Business, Maryland's leading small-business advocacy group.
Phyllis Burlage, who owns and operates Burlage and Associates, an accounting firm located in Millersville, acknowledged to the House Ways and Means Committee that Maryland is facing a deficit. For that reason, some lawmakers are looking for new revenue from sources including corporate tax increases and the expansion of sales tax to services.
HB 448, Sales Tax on Services, is not the appropriate solution, she told the delegates.
"The expansion of the sales tax to services will have a significant effect on small-business owners that purchase the services on which the new sales tax will be imposed, leaving less operating money to make payroll, expand business and compensate employees," Burlage said.
"The expansion of the sales tax to services discriminates against small business," she explained. "Large businesses often have people on their payroll who provide the services that small business must pay an outside contractor for. This adds another competitive disadvantage to small business."
The new taxable services would include vehicle repairs, parking, storage, tax preparation, direct mail, printing brokerage, employment agency and temporary help, among many others. The costs to business associated with this legislation are enormous and would become huge new administrative burden, Burlage concluded.
