During roundtable with Franchot small business owners call for tax credit

Retailers feeling the economic pinch of the ongoing coronavirus pandemic said a tax credit could help ease their pain.

The call for a tax credit came during a roundtable discussion between more than a dozen retailers — mostly small business owners — and Comptroller Peter Franchot that was hosted by the Maryland Retailers Association. The call came in advance of tax-free shopping week, an annual event that exempts clothing and shoes under $100 from state sales taxes and has typically signaled the back-to-school shopping season.

Staci Smith, owner of Stevie Lynn’s Bowtique in the town of  North East in Cecil County, said she had to rapidly convert her business from a storefront to online when her storefront was closed in March because of the pandemic. She said a tax credit could help her and others offset the costs of those closures.

“For the months that you were shut down to have like a blanket amount to help cover fixed expenses,” said Smith, adding that a credit of $2,000-$3,000 per month would be helpful to small businesses. “Just something to help cover the costs when you were shut down.”

Angel Tandy, owner of Sassanova Boutique, which has locations in Bethesda, Harbor East and Baltimore County, said she agreed with a call for a tax credit.

“Right now, I struggle with fixed costs with reduced sales,” she said. “The (federal Payroll Protection Program) money I received was amazing. I was able to keep about a quarter of my staff employed but that’s not going to continue to carry us through 2020. So if there was some type of a tax credit that could be carried back to us, that would be helpful.”

Tandy said she attempted to increase her business during the closure by taking advantage of lengthy delivery delays that hobbled some larger online retailers as the pandemic pushed consumers out of brick and mortar stores and increased online sales. 

“Any local online orders, we were personally delivering the merchandise to their doorstep,” said Tandy. “It was one thing we could control and we took advantage of that.”

Items of footwear and clothing less than $100 are exempt from the 6% state sales tax between Aug. 9-15. 

Franchot said a tax credit could have some merit.

“I think a tax credit is entirely appropriate because Boeing, Amazon, all of these big companies are getting billions of dollars,” said Franchot. “They don’t pay any taxes. Let’s be honest. So let’s figure out a small business tax credit. That, once again, is something the legislature has to do.”

The comptroller encouraged business owners to “struggle through if you can, saying he believed a vaccine or therapy against the virus was forthcoming. He also urged consumers to take action to save businesses in the state during the tax-free shopping week. 

“It’s turned a rather sleepy August week into a good shopping week,” said Franchot. “I’m suggesting to Marylanders that even if they don’t need anything or even if their kid is sitting barefoot in front of a computer, go down to your stores, visit them, make purchases. If need be, go to their websites because the 6% is forgiven over the websites also. And if they don’t need anything go down to and write out a big check to local small businesses and buy a gift card.”

Retailers have been trying to find their footing again since June when Gov. Larry Hogan eased restrictions put in place meant to slow the spread of COVID-19. 

“We need you to survive,” said Franchot. “We need you to be healthy.”

Franchot also used the meeting to renew his call for $10,000 to $15,000 coronavirus relief grants to businesses.

The money for the grants would be paid for using $500 million of the state’s rainy day fund. Franchot called on Gov. Larry Hogan to “blow the dust off the big ledgers” and start sending checks to small businesses. He praised Great Harvest Bread Company, an Annapolis Bakery for remaining open, keeping 13 employees on the payroll and providing food to those in need.

“The fact that you were able to stay open, you and your husband, and keep some of your folks employed, the amount of bread and products that you have given to people who were completely desperate and in need is so commendable,” said Franchot. “If I were governor, I would show up tomorrow with a $15,000 check from the rainy day fund and say ‘Thank you’ — from six feet away of course — and just encourage you to keep doing what you are doing.”