BERLIN – The sales tax in Maryland officially increased by 20 percent yesterday, from five cents on the dollar to six cents, sending many local merchants scrambling to physically implement the change at the cash register.
During a rare special session in November, state lawmakers voted to increase the sales tax in Maryland as part of a larger revenue generating plan to address the anticipated $1.7 billion structural deficit. While the new sales tax rate increased by just a penny, it represents a significant decrease in the amount of tax consumers will pay for goods and services in the state.
In Ocean City, the increase is even more pronounced because the rate changed from six cents on the dollar to seven cents. Several years ago, state lawmakers added a penny to the sales tax rate in the resort only to help finance the expansion of Ocean City’s convention center.
While much of the debate about the sales tax increase has focused on concerns about consumers crossing over into Delaware, which currently has no sales tax, other issues raised relate to the implementation of the change. Most merchants use high-tech, point-of-sale software programmed for the old tax rate and making the change this week was no easy task for many.
“The biggest challenge for many of our members has been scheduling the changeover,” said Ocean City Hotel-Motel-Restaurant Association Executive Director Susan Jones. “There are only so many programmers working in the area, so many of our business owners have found themselves on a waiting list this week.”
Jones said compounding the sales tax increase confusion for many was the associated increase in the room tax. Worcester officials last year voted to raise the room tax with a portion of the increase dedicated to tourism marketing in Ocean City and the county and that change went into effect on Jan. 1, just two days before the sales tax increase went into effect yesterday.
“For a lot of our members, they are dealing with both changes at the same time, right in the middle of one of the biggest holiday weekends of the winter,” said Jones.
While changing the software at the point-of-sale systems for many merchants to reflect the sales tax change hardly compares to the challenges of Y2K eight years ago, it does present challenges to local merchants scrambling to update their systems. Similarly, the trickle-down reached the companies that sell and service the systems this week.
Depending on the type of system, the sales tax change can be implemented through the computer in many cases or require a hands-on visit from the service provider in others. In either case, those on the front lines of the industry were scrambling to get their clients up to date this week.
“We literally have hundreds of customers in Ocean City and Maryland with various types of systems,” said Mike Miles of Innovative Cash Registers this week. “Some we can do remotely through the computer, but in other cases, we have to actually visit the businesses.”
Miles said most merchants were aware of the pending change, but got absorbed in running their businesses through the hectic holiday season. As a result, many were scrambling to get the change implemented this week.
“One of the biggest problems has been scheduling the changes for our clients,” he said. “It’s not like we can just flip a switch at midnight.”
Delaware Business Systems spokesman Mike Henson said yesterday the company has 200 accounts in Maryland, many of which are in Ocean City, but said the transition has been smooth for the most part.
“A lot of clients are covered by a support contract and the change was automatically taken care of,” he said. “For the others, we’re just trying to prioritize. We began the first thing this morning [yesterday], and we hope to have everybody changed over by the end of the day.”