As part of a package of veto overrides that will implement much of the Kirwan education funding plan that Gov. Larry Hogan vetoed last year, the Maryland General Assembly approved a first-in-the-nation digital advertising tax that proponents say will raise up to $250 million per year for schools.
Proponents of the legislation, which was implemented over Hogan’s veto with only Democratic votes in both the House and Senate, say that the sales tax will only be implemented on businesses with “global annual gross revenue of at least $100 million.” However, opponents, including Gov. Hogan and a group called Marylanders for Tax Fairness, which launched an advertising blitz urging that the veto be upheld, claim that Facebook and Google will pass on the costs to advertisers, harming small businesses that are already struggling.
Proponents, including Senate President Bill Ferguson (D-Baltimore), said they plan to introduce companion legislation that would bar tech companies from passing the tax on to consumers. Former UM chancellor William “Brit” Kirwan, for whom the Kirwan Commission is named, said the funding from this tax, and additional levies on electronic cigarettes and tobacco, will ensure that “Maryland is now on track to develop a school system that will be the envy of the nation and as good as any in the world.”
That said, the fight over the digital ad tax is likely far from over. Doug Mayer, a spokesperson for Marylanders for Tax Fairness, said in a statement that the law will likely be challenged in court once it takes effect next month.
“This tax increase was historically shortsighted, foolish, and harmful to countless small businesses and employees, and Marylanders will remember it that way,” Mayer wrote. “We will continue fighting this regressive tax wherever possible, including in a court of law.”
That pledge was echoed by Gov. Hogan’s video statement about the overrides, who said that his first victory in 2014 was a statement of opposition to the tax increases approved during Gov. Martin O’Malley’s tenure. House Minority Leader Nic Kipke (R-Pasadena) also predicted that the state will likely have to spend millions of dollars to defend the digital ad tax in court.Download Bulletin PDF