Rep. Jason Murphey is warning his fellow lawmakers about putting a service tax on the information technology services sector. He contends other states have tried this only to find the need to repeal the taxes because of the chaos they caused.
“Earlier today, Governor Fallin released an article entitled ‘Computer Science, Coding Skills in High Demand by Businesses across Our State’ in which she acknowledges the importance of the emerging technology sector in our state,” said Murphey. “It’s important to celebrate this fact, and I appreciate the governor’s recognition of the potential of Oklahoma’s IT industry, but even more importantly, we must realize the great harm that the pending services tax on technology is about to create.”
Murphey serves as the chairman of the House Government Modernization Committee. He says the tax plan for I.T. services failed in Massachusetts and Maryland. In 2013, Massachusetts started a service tax, but had to repeal the measure weeks later because it became clear it would create a burden on businesses using information technology services. Maryland ended up repealing its tax just a year after it was passed.
“The failed Massachusetts experiment shows that trying to put a services tax on information services is a Pandora’s Box of unanticipated outcomes that cause absolute havoc on many areas of the private sector,” Murphey said. “Because so many industries now use computer-based processes, this new law will be very confusing, and it will be difficult for businesses to know if they will be required to collect the tax or not. Those who mistakenly fail to collect the tax will open themselves up to liability.”
He notes Oklahoma’s plan appears to be more aggressive than what Massachusetts tried to put in place.
“In addition to the information technology tax, the proposed Oklahoma tax would also levy a new tax on the entering of data into a computer. This will potentially affect everyone from the freelance writer who provides an article to the local newspaper, to an accountant who processes taxes, to the analyst who uses computational formulas to produce business intelligence.”
Because so many businesses in Oklahoma use computer-based processes, it could lead to unexpected consequences.
“I can only hope that advocates of the plan will learn from the mistakes of other states and quickly abandon this punitive attack on Oklahoma’s economy,” Murphey concluded. “Should legislators continue in the effort to tax IT services, I hope the governor will stand by her support for the industry and the state’s economy and veto the bill.”
