Last month we read about the efforts by Democrats to set a tax trap for Republican governors, including Maryland’s Larry Hogan, as we move into the next election cycle. The plot is nearly as ingenious as it is simple. You gin up public anger about some issue – it doesn’t really matter which one – and declare that there is something inherently “unfair” going on or that money is required to fix the problem. Then you push the Governor to sign off on a tax increase to appease the masses. If he does, you then run a Democrat against him who promptly accuses him of breaking his no new taxes campaign pledge and try to boot him out of office. It’s actually kind of clever in a simplistic fashion.
That agenda is still on display in Maryland, where Democrats are pushing a tax increase for online travel agencies (think Travelocity or Expedia) which will make booking through such online services more expensive. (And would help some powerful chains who do business in the state at the same time.) The Democrat controlled legislature has passed the tax hike, but thus far Governor Hogan is holding off on either signing it or killing it. This week the Washington Post editorial board decided to jump into the fight and give the Governor a good boot to the ribs.
He should sign the bill. The financial stakes are small — it would yield just $3 million to $4 million or so annually for the state coffers. But those millions would otherwise come out of the pockets of taxpayers, who until now have been subsidizing travel agents, for no good reason. That’s unfair.
The bottom line is that travel agents are collecting a sales tax from customers, although they prefer to muddy the waters by calling it a booking fee. Most other businesses are required to remit the taxes they collect on their sales to the state. Why should travel agents be exempt?
The agents may have become used to this comfy arrangement. That doesn’t make it right or equitable.
This is a disingenuous argument at best. As has been pointed out on the pages of their own paper, this tax hike is bad news on a number of levels. The online booking agents have to work on much slimmer margins just to compete, while the big brand chains have name recognition driving business their way by default. Also, these online agencies represent a number of small businesses who employ more than 1,000 people. Further, Maryland relies heavily on tourism. When you drive up the prices that cost conscious travelers are looking at when considering a trip, you make it easier for them to go elsewhere, impacting the entire state’s economy.
And in return all you get – if this works – is a signature on a bill which may make it easier to boot Hogan out of office at the end of his term. In his place you can install another Democrat who will drive up all of the taxes even faster. It’s quite the good deal… if you happen to work for the Maryland Democrat Party.
This rather transparent editorial from the WaPo is selling precisely the type of snake oil that Maryland residents don’t need when their state was already facing more than a billion dollar budget shortfall when Hogan took office. The Governor was elected to try a new approach and attempt to turn things around. He should be given the opportunity to do so and put his own tax plan to the test. If it doesn’t work then you are free to yell at him later, but trying to turn him into a default Democrat right out of the gate will only produce more of the same problems Maryland is already struggling with.