February 15, 2008

During the 2007 Special Session of the General Assembly, the legislature passed and Governor O’Malley signed into law an expanded sales and use tax law covering computer services.  The computer services sales tax, which will become effective July 1, 2008, imposes a 6% tax on computer facilities management and operation; custom computer programming; computer system planning and design that integrate computer hardware, software and communication technologies; computer disaster recovery; data processing, storage and recovery; and hardware or software installation, maintenance and repair.

In response to the new computer services tax, seventeen bills have been filed during this legislative session, ranging from outright repeal of the tax (SB41, SB46, SB138, SB567, HB187, HB196, HB253, HB326) to broadening the exceptions and exemptions from the tax.[1]  Perhaps as a reaction to the computer services tax, bills have been introduced to impose on the General Assembly an increased voting threshold to pass legislation that increases tax rates or imposes new taxes (SB8).  Still other fills modify the new tax for specific purposes.[2] 

The GBTC has been actively engaged in the effort of our members to advise and educate our elected officials of the serious repercussions of the tax, and to encourage our members to take an active role in the cause that they espouse.  There is now a focused and concentrated to repeal or, alternatively, to minimize the effects of the tax: the GBTC is an active member of a coalition of business organizations and Maryland companies working together to repeal the tax, and the GBTC has submitted proposed regulations to the Comptroller’s Office aimed at limiting the application of the tax.[3] 

A number of our members have taken the bold step of establishing the Maryland Computer Services Association, an organization created solely as a lobbying group to lobby on behalf of Maryland’s IT industry, called the Maryland Computer Services Association (MCSA); this organization is one of those groups leading the charge in the campaign to repeal the tax. This organization was created solely as a lobbying group - to lobby on behalf of Maryland's IT industry. The MCSA is collaborating closely with the other organizations seeking repeal, contributing time, technology, and professional lobbyists and political consultants to the cause. MSCA seeks your support.  Follow these links to JOIN the campaign, CONTACT your representatives, TELL THEM how the tax will affect you, CONTRIBUTE to keep the campaign alive, and INVITE colleagues to join them. To learn more, visit www.MarylandNeedsIT.org.

GBTC urges all of our members who are affected to get involved in this important cause. There is a website devoted specifically to provide information and act as an umbrella for the groups fighting the tax, and is appropriately named “Fight The Tech Tax.”  If you would like to learn how you can take action - click here. Tell your colleagues and employees about this site and encourage them to contact their legislators. To learn more, visit www.fightthetechtax.com, and feel free to forward this message to others.

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In addition to the computer services bills, a number of other bills have been introduced that are of significance to our members:

Economic Development.  Several bills would create BRAC revitalization and incentive zones in Maryland (SB206, HB366), establish matching fund for Maryland small business innovation research (SB680), add an “Economic Development Article” to the Maryland Code (HB1050), clarify the eligibility requirements for One Maryland Economic Development tax credits (HB1415), and streamline the manner in which DBED may reinvest its returns on investments (HB406).

Higher Education.  A bill has been filed in the Senate that prohibits the constituent institutions of the University of Maryland from charging an under­graduate student who is a citizen of the US a tuition rate that is higher than the tuition rate charged an undergraduate student who is not a US citizen (SB15).

Government.  Bills have been submitted to establish a Department of Information Technology (SB212), to create a Maryland Clean Energy Center and Clean Energy Fund (HB1320, HB1337), and to launch a Maryland Cancer Treatment Program (HB406).

Energy.  Maryland is continuing to aggressively pursue alternative energy sources.  Bills have been introduced to alter the grant amounts awarded under the Solar Energy and Geothermal Heat Pump grant programs (SB207), redefine the renewable energy credit (SB209), repeal the Maryland Renewable Energy Fund and establish the Maryland Strategic Energy Investment Program (SB268, HB368), impose new rules on electric companies (SB278), create an income tax credit for the purchase of biodiesel-blended heating oil (SB565) and Energy Star appliances (HB1229), govern installation of solar collection panels (HB117), require electric companies to procure and provide customers with specified energy efficiency and conservation measures and services designed to achieve measured energy reduction (SB205, HB374), establish a Renewable Energy Infrastructure Loan Program (HB1145), and prohibit an electricity supplier from preventing an electric company that is affiliated with the electricity supplier from constructing or acquiring a specified electric generating station and associated transmission lines (HB624).

Corporate.  On the corporate front, a number of bills have been submitted that alter the circumstances under which a stockholder of a Maryland corporation who objects to specified transactions may demand and receive the fair value of the stockholder’s stock (SB556, HB728) and modernize the corporate requirements concerning calls for capital under stock subscriptions (SB696, HB743).

If there are any additional bills that are of significance to the business and technology communities, please let us know how we can help with that legislation.