As Maryland lawmakers continue negotiations over how to fill a roughly $3 billion budget deficit, Gov. Wes Moore says there are two tax proposals that will not get his signature: a tax on sugary drinks and another on business-to-business services.
Moore said he laid out three guiding principles when he introduced his proposed budget for fiscal 2026. The two taxes, he said, violate two of the three principles.
“When I laid out that we had to make ourselves more economically competitive and more business friendly, that meant actually creating and opening up pathways for businesses to be able to grow and stay in the state of Maryland,” he told reporters. “And that is why that the broad business-to-business tax will not be in the final budget.”
“We've got to bring down the cost of what people are seeing inside of the grocery stores and inside of the markets,” he continued. “And that's why things like the soda tax will not happen in the state of Maryland.”
The tax on sugary drinks would bring in, by one estimate, about $500 million a year. The business-to-business tax would bring in about $1 billion a year, according to legislative analysts.
Though the current version of the business-to-business services tax is off the table, another tax on specific services, one paid by consumers as well as businesses, is under consideration, according to administration officials.
The officials said “day-to-day consumer services like haircuts” will likely not be taxed. However, they would not say which services might be, or whether those services would be taxed at a rate higher than the originally proposed 2.5%.
Moore’s comments appear to align at least somewhat with those Senate President Bill Ferguson made last week, that the business-to-business services tax proposal would be amended before it passes.
On the other hand, Republican leaders are not satisfied by Moore’s position.
“We're all waiting to see what the word ‘broad’ means,” Senate Minority Leader Steve Hershey said. “I think it's important that as we're trying to make sure that we'll see some type of economic growth and businesses that will decide to stay here and continue to grow here, that they have to be assured that there will be no new service taxes on the services they provide.”
