Feb 27, 2008 6:05 pm US/Eastern
Tax May Force Computer Businesses Out Of State
ANNAPOLIS, Md. (WJZ) ―
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Computer service providers are threatening to move their companies out of state if the looming sales tax isn't repealed.
CBS
Computer services will soon cost more in Maryland. But it could also cost the state the people who provide it.
Service providers say other states are cashing in on an expected computer service sales tax.
Peggy Lee has more on their fight to repeal the tax.
John Eckenrode's computer staffing firm has been in Catonsville since 1985, but it may not stay.
Eckenrode says he'll lose money when the computer sales tax hits, and now Delaware is looking to lure him away.
"We almost have to. Without a full repeal of this computer services tax or without meaningful amendments, we're not going to be able to make money here," said Eckenrode.
In Annapolis Wednesday, Eckenrode learned his company wasn't the only one being recruited by other states.
"Seventy Maryland companies have received the letter from Delaware. A Delaware government official confirmed that they are sending these letters out specially as a result of Maryland's computer services tax," said Tom Loveland with the Maryland Computer Services Association.
"Maryland is a small state. We know that Pennsylvania, Delaware and Virginia are already communicating to businesses in Maryland saying you're going to have to pay this tax, look at our pro-business states," said Kathleen Snyder, Maryland Chamber of Commerce president.
The six percent sales tax is slated to hit July 1, raising roughly $200 million annually for the state.
"If we repeal that computer tax it would be another $200 million on that revenue shortfall. We'll keep an open mind about an adjustment to the computer tax, but unless we can come up with an alternative source of revenue the computer tax is here to stay," said Senate President Mike Miller.
Some computer service providers say if the tax stays, they may not.
"We know these jobs will be jeopardized and the future of Maryland's economy will be jeopardized as a function of the loss of any of these jobs," said Julie Coons with Maryland Tech Council.
Right now, there are 17 separate bills that either outright repeal the tax or amend it.
Roughly 68,000 Marylanders work in computer services.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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