Gov. Larry Hogan is now wrestling with the issue many legislators debated this session: Are online travel agents paying the full sales tax owed to Maryland?
In a “First 100 days of the Hogan Administration” celebration held last month at the Gov. Calvert House, in Annapolis, press representatives asked whether or not he planned to break his “no taxes” streak with the introduction of the new legislation.
“It doesn’t cost the taxpayers of Maryland anything,” said Hogan. “The online companies are charging a fee, a tax if you will, and then not remitting that to the state. Consumers are already paying the money, and they [online travel companies)]are skimming it off the top.”
Supporters of Senate Bill 190, passed by both House and Senate this session, argued that the bill closes a loophole, merely collecting sales tax that online companies had been pocketing. But last month, Hogan still did not commit to either signing or vetoing it.
Hoping for a veto is the Americans for Tax Reform (ATR), which argues that signing the “new tax” would not only cause Hogan to break his promise, but also be bad for Maryland businesses.
“The legislation would enact a new travel tax on … brick and mortar travel agencies, and tour operators … A tax increase on these small businesses will ultimately impact consumers and other businesses who rely on a vibrant tourism economy,” said ATR in a letter sent to Hogan.
“This is one of those bills in Annapolis that is very difficult to sort through which side is accurate,” said Chief Legislative Officer Joseph Getty.
Hogan did not disclose whose side he was on, but he did lean heavily on the idea that this is not a new tax and would not affect his promise made to Marylanders during his campaign.
The governor and his legislative team are paying close attention to the comptroller’s case suing Travelocity in tax court for $6 million in back taxes the office believes are owed to the state.
“There is pending litigation that the comptroller is involved in, in that issue, so as part of our review we are trying to sort through the two different sides, both of which are very convincing, and where Comptroller Peter Franchot is on the issue,” said Getty.