Md. seeks ‘download tax’ on music, apps and more

WASHINGTON – The cost of a 99-cent iTunes song could soon be $1.05, if a measure in Gov. Martin O’Malley’s budget makes it through the General Assembly.

O’Malley wants Maryland’s 6 percent sales tax to cover everything downloaded, which would include not only iTunes songs, but all music, apps, ebooks, ringtones, magazines, blogs, magazines, chat discussions and e-greeting cards people download.

Gift certificates or gift cards would not be taxed.

The proposal is buried in Senate Bill 152, starting on page 33 and going to page 42.

The Baltimore Sun reports the digital taxes, combined with a so-called “Amazon tax” on affiliate sellers doing more than $10,000 worth of business in Maryland, would bring in $26 million in revenue as the state faces a billion-dollar budget gap.

Ronald W. Wineholt, vice president of government affairs for the Maryland Chamber of Commerce, tells WTOP the term “digital product” needs to be better defined. He’s concerned about the impact the bill could have on businesses using online services for things like email, payroll, and accounting.

It also raises the question of whether states can collect sales tax on businesses that have no physical presence in the state. The Senate bill specifically focuses on the consumer, saying that digital products bought, stored, or used in the state can be taxed.

For years Maryland has been trying to figure out how to tax purchases made over the Internet. A tax on new computer services failed in 2007.

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(Copyright 2012 by WTOP. All Rights Reserved.)


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