Another Sales Tax Hike Indefensible

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With a proposed hike in the gasoline tax seemingly dead, talk turned this week in Annapolis to another sort of revenue mechanism — increasing the sales tax in Maryland.

Back in January, Gov. Martin O’Malley first announced his preferred desire to raise the sales tax in Maryland over other alternative increases, such as the one proposed for fuel.

On The Marc Steiner Show on WEAA, O’Malley detailed how the 2008 increase from 5 percent to 6 percent (or 6 cents on every dollar) helped the state avoid massive economic woes associated with the recession. He said increasing it to 7 percent would have a similar impact today.

“That one penny could solve that operating budget problem. … Frankly, if I had my druthers, I would rather do the one penny on the sales tax. It gives us the flexibility, have that address our operating needs and then transition that into the sort of revenue stream that then allows us to have a greater bonding capacity for future transportation,” O’Malley said. “That’s what I would like to do. However, while the governor is one very important player here, it requires the House and the Senate to pass these things.”

At that time, that desire seemed unlikely, as Senate President Mike Miller called it a “non-starter.”

During an interview with The Sun this week, O’Malley outlined two options to raise the needed infrastructure funding for this year’s budget. One was to delay the increased gasoline tax until prices fell below a certain threshold, and the other was to raise the general sales tax, which he called the “ninth-lowest sales tax in the country.” He suggested earmarking the “new” money for highway and transit projects.  

We understand the critical need to keep Maryland’s infrastructure in solid shape, but the governor and anyone else who supports a second sales tax hike in five years has lost all sense of reality.

Maryland businesses in general are struggling. Those in the retail industry are particularly troubled due to surrounding states having lower sales taxes, or in Delaware’s case no sales tax.

The 2008 increase hurt Maryland businesses and sent more shoppers elsewhere. Another hike would put companies out of business and lead to more people being out of work.

It’s important to recall there is already a pending bill calling for a broad expansion of the existing sales tax to more than two dozen new services. That bill will likely pass.

We sincerely hope the legislature does not inflict more pain on Marylanders by putting its hands further into our bank accounts.

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