National Taxpayers Union (NTU) applauds Governor Larry Hogan (R-MD) for vetoing a huge tax increase that would hurt small businesses and create legal headaches for the state. House Bill 732 would have created a new digital advertising tax and significantly increased tobacco taxes. The General Assembly should allow the veto to stand and instead focus attention on efforts to revive Maryland’s economy once it is reopened.
“Maryland small businesses cannot afford a tax hike at a time when so many are hanging on by a thread. Governor Hogan was right to veto this bill and take a stand on behalf of the taxpayers of his state,” said Brandon Arnold, Executive Vice President.
Arnold added: “If the veto is overridden, this bill is heading straight to the courts. As a Maryland resident myself, it’s extremely frustrating to see valuable taxpayer dollars wasted on legal fees when these resources could be used to help struggling families and small businesses.”
Leah Vukmir, Vice President of State Affairs, added: “Governor Hogan is showing strong leadership by standing up for taxpayers during the coronavirus pandemic. Burdening Marylanders by increasing taxes right now would only make it more difficult for small business owners, workers, and families to survive."
The reality of this tax is that higher costs of advertising would be passed down to the small businesses that depend on digital ads to reach customers. Furthermore, the tax would certainly face a serious legal challenge and could be struck down by courts, as many legal scholars believe it violates both federal and constitutional law. Even if upheld by the courts, it is extremely unlikely that Maryland would collect any revenue from this tax for years.
The tobacco tax provisions would double taxes on cigarettes and raise taxes on other tobacco products such as e-cigarettes, which have helped millions of people quit smoking.
In April, NTU led a coalition of 13 free-market groups in urging Governor Hogan to veto the bill. In February, NTU, along with more than 30 Maryland-based small businesses and nonprofits, expressed concerns regarding the proposal’s impact on their ability to attract customers and advance their missions.