Maryland Repeals Controversial Tech Tax

The House of Delegates joins the Senate in rejecting a 6 percent tax on computer services. 

The Maryland House of Delegates April 8 waited just one day to join the Maryland Senate in repealing a controversial 6 percent tax on computer services. Gov. Martin O'Malley quickly signed the new legislation.

As originally approved in 2007, the Maryland legislature raised the state sales tax by 1 percent to 6 percent and added computer services to the list of taxable entities. State and national IT leaders have lobbied extensively to repeal the tax.

The new legislation replaces the computer services tax with a new levy on millionaires and a package of tax cuts.

"The repeal represents a major win for economic common sense and equity," Roger Cochetti, group director of U.S. public policy for the tech trade group CompTIA, said in a statement.

"IT services drive the productivity and welfare of Maryland's businesses, workers and citizens, and to impose such an onerous burden on those services would have greatly stunted the ubiquity and use of those essential tools."

Cochetti said that a lot of small businesses operate on thin margins and the new tax would lead to less investment in IT services in the state.