- The Washington Times - Thursday, February 7, 2008

Maryland technology firms have learned a valuable lesson: Never be without a lobbyist in Annapolis.

The industry, caught flat-footed when lawmakers passed a tax on computer services in November, has mobilized and is pushing back with a new trade group, two Web sites, a public relations team — and lobbyists.

“We need to be there 24/7,” said Tom Loveland, chief executive officer of Mind Over Machines Inc., a technology firm in Owings Mills. “They must see us. They must know about us.”

The computer-services sales tax was inserted at the last minute into a $1.7 billion budget bill during last year’s special session of the General Assembly, to the surprise of information-technology companies. An earlier proposal by Gov. Martin O’Malley, a Democrat, to tax luxury services such as health clubs and tanning salons failed after the affected industries descended on Annapolis to protest.

The tax, which takes effect July 1, applies a 6 percent levy to information-technology services, including computer programming, system design, disaster recovery, data processing and storage, and software and hardware installation, maintenance and repair. Legislators said it will raise $200 million this year to help close a budget shortfall.

Mr. Loveland, president of the newly formed Maryland Computer Services Association, was one of several speakers yesterday at an Annapolis breakfast briefing on the new tax. He called on dozens of small-business executives to call lawmakers and tell them how the new tax will hurt profit margins and drive business to Virginia and other states.

“We’re business people. It’s tough to have time. But we need you there, we need your voice,” said Delegate Ron George, Anne Arundel Republican, who is sponsoring a bill that would repeal the tax.

House Bill 196 has 72 co-sponsors representing a majority of the House, but the challenge is getting the legislation out of the Ways and Means Committee, Mr. George said.

“We’re saying, if you come up with the same amount of money for us, fine,” said Delegate Sheila E. Hixon, Montgomery County Democrat, who chairs the committee.

Mr. George said he supports trimming $203 million from the budget to offset lost computer-tax revenue, as proposed by the House Republican Caucus. In most cases, the targeted funds come from reducing new budget increases — a move which Ms. Hixon rejected as tantamount to “tax cuts.”

A bill to repeal the computer tax has also been introduced in the state Senate. Sen. Ulysses Currie, Prince George’s County Democrat, who chairs the Senate Budget and Taxation Committee, did not return a phone call seeking comment.

“The best lobbyist groups are the ones, like the [National Rifle Association], that do not give one inch,” Mr. George told business owners yesterday, cautioning them against agreeing to a compromise that would only marginally improve their problem.

The Maryland Computer Services Association plans to sponsor a “Computer Services Day” next month. If enough of the state’s technology companies get the word out, Mr. Loveland said he’s “very cautiously optimistic” about the industry’s chances of getting the tax repealed.

If not, there’s always the route Mr. George took. The jewelry-store owner said he decided to run for state office after testifying years ago against a proposed tax increase.

“I went up there, and I realized they just didn’t get it,” he said.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide