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A bill that would have dramatically expanded Maryland鈥檚 sales tax to raise more than $2.9 billion for education reform efforts has been voted down by a key House subcommittee.
House Majority Leader Eric G. Luedtke (D-Montgomery) tweeted Wednesday night that the Revenue Subcommittee of the Ways and Means Committee, which he chairs, voted unanimously to kill House Bill 1628, which he sponsored.
The bill would have lowered the state鈥檚 sales tax rate from 6% to 5%, but expanded it to apply to most services not currently taxed.
The measure attracted emphatic opposition at a hearing earlier this week.
Given the 鈥渢remendous concern from the public and from small business owners,鈥� Luedtke said the subcommittee was opting instead to move a smaller package of revenue bills. It includes measures that would implement combined corporate reporting in the state, increase the state鈥檚 tobacco tax and apply it to vaping products, and tax certain digital goods similar to tangible goods.
Combined, the measures could generate more than $350 million annually by 2025, according to preliminary fiscal estimates based on the bills as they were originally drafted, though amendments have been proposed.
鈥淭aken together, these bills get us much of the way to fully funding the Blueprint, though future legislators and Governors will have more work to do to fund the final few years of the plan,鈥� Luedtke tweeted. 鈥淎nd they make our tax system more fair and help many Maryland small businesses.鈥�
The measure expected to generate the largest amount of revenue is the implementation of combined reporting and a corporate tax throwback rule in Maryland. Those efforts were sponsored by Del. Mary Lehman (D-Prince George鈥檚) and Del. Vaughn Stewart (D-Montgomery).
Combined corporate reporting has been regularly debated 鈥� and opposed by leading business groups 鈥� in the General Assembly since 2003. But Maryland is now among a minority of states that have not implemented the change.
The full House Ways and Means Committee is expected to consider the revenue package on Friday and the bills could be taken up in the House chamber early next week.
Also on Wednesday, the Ways and Means Committee voted 13-4 in favor of the Blueprint for Maryland鈥檚 Future education reform bill. The House Appropriations Committee also passed the measure, sending it to the House floor.
鈥淲hile the revenue package is important, the bill it supports is more important still,鈥� Luedtke tweeted. 鈥淚t鈥檚 a moral stain that our state doesn鈥檛 give every kid a great education. Providing it is also the key to our economic future.鈥�
