The D.C. Council came right up to the edge of imposing a tax on advertising but it looks like the pushback from ad agencies, broadcasters and others has won the day.
The council two weeks ago had tentatively voted to approve the portion of a massive budget bill that included 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 National Association of Broadcasters Thursday (July 23) was celebrating the news that the council would instead consider amendments to a larger tax bill that "paves the way" for the removal of the ad tax.
The amendments find sufficient funds elsewhere to cover the $18.4 million the council was budgeting for the ad tax, which can now be eliminated, said Council chairman Phil Mendelson. "The amendments I am circulating today will reverse a policy choice that I now regret," said Mendelson. "I overestimated the effect my proposing this tax would have to discourage colleagues' desire to raise other taxes."
"ANA is very pleased and appreciative that the Council of the District of Columbia has backed away from a sweeping tax on advertising and data," said Dan Jaffe, ANA executive VP of government relations. "It demonstrated a recognition that the tax would severely hurt economic recovery in the District and be particularly damaging to small business and community media. This result was possible only because of the broad outpouring of concern directed to the Council from the whole ad community."
National Association of Broadcasters president Gordon Smith was definitely declaring victory.
"The outpouring of opposition expressed by local media companies and citizens in D.C. and across the nation effectively defeated the tax, which would have placed an undue burden on small businesses and local media already struggling amidst the pandemic," he said. "This should serve as an example for other local governments that such misguided taxes on advertising are counterproductive in stimulating local economies and will continue to be met with fervent opposition."
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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.