The proposed law could implement a sales tax on some labor and professional services.

A new bill has been introduced in the Maryland legislature that would add a sales tax for services like landscaping, haircuts, housecleaning, and legal work. House Bill 1628 would add the new sales tax but lower the rate from six percent to five percent. The bill is sponsored by a group of Democratic lawmakers in order to help fund the proposed education bill based on the recommendations of the Kirwan Commission.

Proponents of the bill say it will help to even out Maryland’s existing sales tax structure that focuses on goods. Maryland and the U.S. have gradually switched to an economy based more on services. The bill draft does not give a clear definition of what business or labor services would be subject to the bill. It does exempt social services and healthcare, services provided by a religious organization, and educational services. A fiscal analysis shows the bill could generate $2.6 billion in revenue over five years.

Governor Larry Hogan speaks at a press conference on Feb. 20, 2020, courtesy Joe Andrucyk, Patrick Siebert

The bill is sponsored by seven Democrats, including Maryland State House Majority Leader Eric Luedtke. Governor Larry Hogan pushed back in a press conference in Annapolis and said the bill isn’t going to pass while he is governor.

“It is a tax on working families," he said. "It’s a tax on single moms. It’s going to be $1700-and-some dollars per household on every service that they utilize. On daycare, on barbers, on dog walkers, on landscaping, on somebody that cuts your grass. This is the largest tax increase ever in the history of the state.”

House Bill 1628 is still in the beginning stages and would have to go through several more steps before it can be voted on by the full assembly. Bills taxing sports betting, cigarettes, and digital advertising have also been proposed to help fund the education bill.

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