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Governor Wes Moore (D) has rejected a proposed business-to-business (B2B) services tax, stating it does not align with his goals of fostering a business-friendly environment and reducing costs for Maryland residents. However, he signaled openness to a broader tax plan extending to consumer services.
Key Developments in the Services Tax Debate
- B2B Tax Rejected – Moore confirmed that a broad B2B services tax will not be included in the state budget.
- Potential Consumer Taxation – While opposing a business-only tax, Moore is open to a revised package that may include consumer services taxation.
- Sugary Beverage Tax Blocked – The governor also rejected a 2-cent-per-ounce tax on sweetened drinks, citing concerns over rising grocery costs.
Legislative and Business Reactions
The initial B2B tax proposal, with companion bills in the House and Senate, aimed to generate $940 million in 2026 and $1.4 billion by 2030, heavily impacting tech and consulting firms. Moore’s opposition to the measure was met with mixed reactions:
- Mary D. Kane, Maryland Chamber of Commerce – “We were thrilled to hear the governor oppose a B2B tax, but the possibility of expanding it to consumers is concerning. Business taxation in any form hurts competitiveness.”
- Mike O’Halloran, NFIB State Director – “This is a step in the right direction, but we remain cautious. Any tax that makes Maryland less business-friendly should be off the table.”
Republican lawmakers also voiced concerns about potential new taxes impacting businesses and middle-class consumers.
What’s Next for the Budget?
The Maryland legislature continues to debate the fiscal 2026 budget, working to finalize tax and spending plans before the session adjourns. Lawmakers are expected to:
- Determine whether a broader services tax that includes consumers will be introduced.
- Finalize a budget that balances revenue needs without harming businesses.
- Address concerns regarding Maryland’s economic competitiveness.
With Democrats holding a supermajority in both chambers, the final outcome will largely depend on internal negotiations and Moore’s willingness to compromise.
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