Advertising Tax Effectively Eliminated In D.C. Budget Proposal

The D.C. City Council just held a critical vote on its budget, effectively killing its previous efforts to enact a 3 percent sales tax on advertising. By a vote of 11 to 2, the Council passed an amendment that would eliminate $18 million in proposed spending increases, which would have been funded by the new ad tax. This paves the way for an additional vote next Tuesday to strip the ad tax itself from the Council’s Budget Support Act, which we expect to similarly pass.  The tax would have applied to the purchase of advertising, including the business costs associated with its planning, creation, placement and display of advertising. No other state in the nation has this tax.

In response to the D.C. Council approving an amendment that paves the way for the removal of a proposed tax related to advertising from the Fiscal Year 2021 Budget, the following statement can be attributed to NAB President and CEO Gordon Smith:

“NAB thanks Chairman Mendelson and D.C. Council members who voted to support a path forward to remove the proposed advertising tax from this year’s city budget. This development is a major win for local media, advertisers, consumers and commerce. 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. 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.”

The Michigan Association of Broadcasters participated by sending a letter to the DC Council. The real applause goes to Lisa Reynolds, Executive Manager of the Maryland DC Delaware Broadcasters Association and the NAB Government Relations team who turn the situation around.  Why would Michigan become involved? Because if a Tax on Advertising can be levied by a local government it will spread like wildfire and pretty soon it will be coming to a city council near you.

Background:

The D.C. Council recently proposed a 3% sales tax on businesses that buy advertising on TV, radio, print and digital outlets. The tax would apply to the purchase of advertising, including the business costs associated with its planning, creation, placement and display of advertising. No other state in the nation has this tax.