Maryland lawmakers axe bill that would have taxed financial advice
More states are looking to tax previously exempted services like financial, medical, and legal advice, to broaden their tax base,
A bill that would have levied a new tax on financial advisory services was unanimously pulled by a subcommittee of the Maryland House of Delegates. The HR 1628 Sales Tax and Services proposal would have lowered the state’s sales tax from 6 percent to 5 percent, but expanded the tax to include the consumption of services like financial and legal advice, and the hiring of a real estate agent.
The bill was introduced by Maryland’s House leader, a Democrat, and was strongly opposed by the state’s Republican Governor, Larry Hogan.
Expanding the sales tax to professional services was a cornerstone of the bill, which purportedly would have raised $2.9 billion annually over 10 years to fund a re-haul of the state’s public education system.
SIFMA, the Investment Company Institute, and Insured Retirement Institute submitted testimony to a revenue committee hearing earlier in the week, arguing, in part, that the tax would hit middle-income savers and deter adequate retirement savings.
While professional services like financial advice have historically not come under the fold of state sales taxes, more states are looking to tax previously exempted services in order to broaden the tax base.
Professional services—financial advisory, legal, medical, for instance—have been able to stave off attempts to be included in state efforts to widen tax bases.
“The imposition of a sales tax on services is an entirely new subject and should therefore be thoroughly examined before adoption in and form by the Maryland General Assembly,” said Jason Berkowitz, IRI’s chief legal and regulatory affairs officer, in a statement.
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