O'Malley wants to tax apps, e-books, other downloads

ANNAPOLIS -- Marylanders might have some extra inspiration when they download "Angry Birds" to their smartphones in coming months.

The state would charge a 6 percent sales tax on virtually every downloaded product under an obscure provision in Gov. Martin O'Malley's proposed budget.

In other words, that 99-cent downloaded song from iTunes would cost $1.06, and smartphone apps, e-books for your Kindle, ringtones, chat discussions and other digital products would get pricier. Among the few exceptions, gift certificates and gift cards would not be taxed.

The Democratic governor's proposal, part of a wide-ranging menu of tax increases to close a $1.1 billion shortfall, is drawing criticism from both Republican lawmakers and the business leaders who say residents and companies can ill afford another charge amid economic turmoil.

"This is another one of the greatest hits of Martin O'Malley," said Maryland House Minority Leader Anthony J. O'Donnell, R-Calvert/St. Mary's. "He just keeps playing this long string of tax tunes. This guy is pumping out so many different tax proposals that there's going to be a custom app just for that."

O'Malley proposed a budget last week that would raise taxes on residents making more than $100,000 annually, double the "flush" tax to $60 a year and increase the price of certain tobacco products. He is also expected to recommend raising the state's 23.5-cents-per-gallon gas tax in coming days.

Democrats contend that higher taxes are necessary if lawmakers are to close a massive budget shortfall without making damaging cuts to education and transportation, among other areas.

But O'Donnell countered that O'Malley was simply proposing an array of taxes in hopes that "at least a few of them" would make it through the General Assembly.

The Maryland Chamber of Commerce, among other groups, has argued that the wording of the bill is too expansive, opening the door to a variety of cryptic taxes on digital products.

"We are open to clarifying the language," said O'Malley spokeswoman Raquel Guillory in response to the criticism. "I can be clear that the proposed language never taxed services."

Just four years ago, the state's technology industry railed against the so-called "Tech Tax" and forced its repeal.