We all expect it when we go to buy just about anything. There's the price of the goods and the dreaded tax added on at the end. Consumer taxes tend to be higher for goods or services that the government thinks consumers should avoid, like liquor and cigarettes. But other goods, like gasoline, can get a heavy dose of taxes as well.
Gasoline taxes generally fund highway construction and maintenance, while sales tax revenue usually goes into the state's general fund. The actual amount of the tax per gallon varies based on a statutory formula. In general terms, Maryland consumer tax laws place a relatively high tax rate on cigarettes, which is used to raise money for state-wide use.
The basic provisions of Maryland consumer tax laws are listed below:
| Sales Tax | 5% Tax-Gen. §11-104 |
| Cigarette Tax | $1.00/pack of 20 cigarettes Tax-Gen. §12-105 |
| Gasoline Tax per Gallon | 23.5¢ Tax-Gen. §9-305 |
| Use Tax | 5% Tax-Gen. §11-104 |
| Liquor Tax | Beer 9¢/gal.; Wine 40¢ /gal.; Spirits $1.50 gal.; Tax-Gen. §5-105 |
| Gambling Tax | NA |
Note: State laws are constantly changing -- contact an attorney or conduct your own legal research to verify the state law(s) you are researching.
Purpose of Consumer Sales Tax
Unlike income taxes, consumer taxes are directed at how a person spends their money rather than how much money they make. Consumer taxes in Maryland are a flat percent, not a graduated scale like income tax. This means that everyone pays the same percent, regardless of how much they spend. However, there are different tax percentages depending on the sale or item taxed. In addition to revenue raising, Maryland imposes taxes on certain items to discourage their purchase, and to pay for costs associated with that item.
Types of Consumer Taxes
There are two general forms of consumer taxes in Maryland. The type most people are familiar with is sales tax. Sales tax applies to most consumer sales in the state. However, there are some exceptions. The other form of consumer tax is excise tax. This is a tax on a specific item. The tax can be a flat rate per item, or it can be a percentage of the price, like a sales tax. Excise taxes are used to either discourage purchasing or using an item, or to help pay for expenses that are associated with it.
Sales Tax in Maryland
Maryland charges a 5% sales tax for sales within the state. Note that counties and cities may have their own sales tax on top of the state sales tax.
Cigarette Tax
The state of Maryland charges $1 in tax for every pack of cigarettes. This tax is meant to discourage smoking, and pay for any costs the state may incur from cigarette smoking.
Gasoline Tax
Maryland charges a 23.5 cent tax for every gallon of gasoline. This is in addition to any federal or local gasoline taxes. The revenue from gasoline taxes generally pays for road repair and maintenance.
Use Tax
If you want to avoid paying taxes on an expensive item, like a car, you may try to purchase the car in a state that does not charge sales tax. However, Maryland will charge a use tax at the same rate as a sales tax, once you register the car in the state.
If you would like to know more about consumer taxes, there are many Maryland tax attorneys who may be able to help. In addition to informing you about the law, they may be able to advise you about methods to avoid paying unnecessary taxes, while still staying within the bounds of the law.
