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As Maryland lawmakers work to finalize the state budget, proposals for a new tire tax and adjustments to the IT and data tax are emerging as key negotiation points.
IT and Data Tax Under Scrutiny
Senate President Bill Ferguson signaled that changes are likely to the proposed 3% tax on data and IT services, particularly concerning IP services and sports licensing. While the 3% rate will remain unchanged, the scope of taxed services is still being debated.
“The goal is to capture more services as the economy shifts away from being goods-based,” Ferguson said. However, Senate Minority Leader Steve Hershey criticized the process, stating that Democrats remain undecided on key aspects of the tax, including which services will be affected and how much revenue will be generated.
Vehicle Excise Tax Adjustments
The House’s budget proposal included increasing the vehicle excise tax from 6% to 6.8%, but the Senate is expected to push for a lower rate. Ferguson suggested a compromise figure of 6.35%, with final negotiations pending.
New Tire Tax Proposal
To offset reductions in the excise tax hike, lawmakers are considering a new tax on tires. Revenue from this tax would be directed toward the Transportation Trust Fund for road and bridge repairs.
“We have a tire fee associated specifically for the TTF,” Ferguson explained. He suggested a possible flat-rate fee of $5 per tire, describing it as a “user fee” applicable to both electric and combustion engine vehicles. This proposal emerges as an alternative to prior attempts at a per-mile tax, which raised privacy concerns.
Next Steps
The Senate is set to begin budget debates on Monday, followed by conference committee negotiations. Lawmakers aim to finalize the budget by the end of the week.
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