The Association of National Advertisers is urging the D.C. City Council not to pass a 3% tax on advertising services, which would affect both ad sales and creative, as well as the sale of personal online information including browser habits and consumer preferences.
According to ANA, the council Tuesday (July 7) tentatively voted to approve the portion of a massive budget bill that includes a sales tax on advertising services, which are defined as "the planning, creating, placing, or display of advertising in newspapers, magazines, billboards, broadcasting, and other media, including, without limitation, the providing of concept, writing, graphic design, mechanical art, photography, and production supervision.”
Sales taxes on advertising services surface periodically when states and localities are looking for new sources of revenue, which they definitely are in the current economic tsunami of COVID-19.
“The Council is considering an extremely misguided tax that has failed everywhere it has been tried,” said ANA Group EVP Dan Jaffe. “Advertising taxes suppress consumer demand, slow job growth, and ultimately cause products and services to become more expensive for consumers. A tax on advertising is always counterproductive but would be even more damaging during the COVID pandemic and the accompanying severe economic downturn. Clearly, this tax could be backbreaking for small businesses and community publications.”
The tax was proposed by Council president Phil Mendelson, who estimated it could raise $18 million.
The odds are against passage if past is prologue, though there is no precedent for the current pandemic's economic hit on the country.
ANA points out that over 100 ad taxes have been proposed since 1987, with none making it into law.
Most recently, Maryland passed a digital ad tax over ANA's vociferous objection, but the bill was vetoed by Gov. Larry Hogan, preserving that perfect record. Hogan said that bill was misguided and would raise taxes at a time when many are out of work and struggling.
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Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.