We are approaching the start of the 2021 General Assembly Legislative Session, which begins in January. The first item of business that will be taken up, by rule, is consideration of vetoes by Gov. Hogan.
In the closing days of the 2020 Session, which was abbreviated due to COVID-19, General Assembly Democrats rushed through several tax increases and creation of a new tax combined into one bill. Public input was nearly non-existent due to the condensed nature of those closing days of session and the fact that several bills had been combined into one.
The legislation, House Bill 732 – the Tobacco Tax, Sales and Use Tax, and Digital Ad Tax, is a deeply flawed proposal. Among the taxes and fees it will raise are the following: 1) create a new tax on every single person and business that advertises their services online, from the smallest mom and pop to the largest corporation; 2) tax all electronic smoking devices at a rate of 12% and vaping liquid at an astronomical 60%; and 3) increase the per-pack cigarette tax from $2 to an unbelievable $3.75 per pack.
Let me again stress that this massive tax package was passed while the state was entering into what we knew would probably be an awful period for working families, small businesses and our economy. That turned out to be absolutely true.
I helped lead the floor debate opposing this bill and voted against it, as did our District 5 delegates. It’s hard to say which tax hike in the bill is worse.
HB 732 creates a brand new tax on digital advertising. Maryland would be the first state in the nation to have this kind of tax. It will effect small businesses most negatively of all as they try to compete for dollars and attention in the online marketplace.
However, the increase in taxes on vaping and electronic smoking devices and, especially the near-doubling of the per-pack cigarette tax is in my estimation, a tax that unfairly falls on poor and lower middle class people most of all. I don’t smoke or vape and I encourage people not to for their own health, but for government, in the middle of an economic and health crisis to put the screws to working people is just wrong.
Thankfully, Gov. Hogan vetoed HB 732, for many of these same reasons I’ve outlined. However, the legislators that pushed this are planning on overriding his veto when they come back to Annapolis in January. If this bill passes, Maryland would have the notorious distinction of being the only state in the country to enact a digital advertising tax along with a cigarette and vaping tax that’s almost comically high and absurdly unfair to those who can least afford it.
As individuals and small businesses struggle to put food on the table and keep their doors open, the last thing they need are higher taxes. I will be standing in strong opposition to this override and urge my Senate colleagues in both parties to do the same. We need to give people and job creators a break not raise their cost of living and doing business.
As always, I welcome your thoughts and appreciate the opportunity to represent Carroll County in Annapolis.
Justin Ready is a State Senator representing District 5.