A wooden inlay of the Great Seal of the State of Maryland adorns a State House elevator. Photo by Danielle E. Gaines.
A plan to tax services used by some businesses will not have the support of Gov. Wes Moore (D) unless it also expands on the people who pay.
Moore told reporters Monday that his office has “been working very closely” with lawmakers. As a result he told reporters that two proposed taxes — a sales tax on services between businesses and another on sweetened beverages — would not pass.
The governor said the proposals did not measure up to his goals of making the state more business-friendly and lowering costs for residents who are feeling the pinch.
“That is why the broad business-to-business tax will not be in the final budget. So, a broad B2B tax will not happen in the state of Maryland,” Moore said.
But Moore’s comments did not fully explain the position he was announcing. Moore’s opposition to a “broad business-to-business tax” on services would become more acceptable if a sales tax was also assessed on services that some consumers would pay directly.
Moore also cited his priority to keep costs to Marylanders down as he announced that a proposed 2-cent per ounce tax on sugary drinks would not get his signature if it reached his desk.
“We’ve got to impact, we’ve got to bring down the costs of what people are seeing inside grocery stores and inside markets,” Moore said. “And that’s why the soda tax will not happen in the state of Maryland the soda tax will not be included in the final budget.”
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The governor left immediately after making his statement. He did not take questions from reporters.
Following that appearance, administration officials spoke to reporters to provide additional details.
In those discussions, administration officials familiar with budget negotiations, repeated the governor’s objection to a tax solely on businesses.
Those same sources, who spoke on background with reporters, said Moore would consider a package that also included taxes on services direct to consumers as well as on businesses. Those sources acknowledged that any business-to-business sales tax would likely be passed on to consumers if the current bill became law.
The exact list of services or examples were not provided.
Those same officials left open the door for a change in the current proposed rate of 2.5% — lower than the 6% sales tax rate the state levies on goods. Officials said that while the number is “in the ballpark” they would not rule out a decrease or increase in the proposed rate.
It is not clear on how much the House, Senate and the governor actually agree.
House Appropriations Chair Ben Barnes (D-Prince George’s and Anne Arundel) did not comment on specific negotiations with Moore or the services sales tax.
“We have been working closely with the governor and the budget that house appropriations and ways and means will pass tomorrow will reflect that,” Barnes said in a statement Monday.
Leaders in the Senate were not immediately available for comment.
Moore’s comments come as the legislature continues to hammer out a spending plan for fiscal 2026. Lawmakers are meeting in multiple voting sessions as they hurry to meet a key legislative milepost: Each chamber is racing to pass bills that can be sent to the opposition chamber by the end of the day.
Bills that miss that deadline face a tougher time becoming law.
Additionally, the House and Senate continue to hammer out a budget. The House delayed finalizing its version of Moore’s spending plan in order to see if the federal government would shut down last week. The delay puts the House on track to debate the bill as early as the end of the week with the Senate getting the bill next week.
The delay, which was not unexpected, likely means the House and Senate will miss a deadline to complete the budget by the 83rd day of session. As a result, Moore is expected to issue a letter requiring the legislature to remain in session to work only on completing the budget. The House and Senate are expected to complete the budget by April 7 before the General Assembly adjourns.
– This story will be updated.