The DC Council is proposing a 3 percent sales tax on advertising as part of its Fiscal Year 2021 budget. ASAE and other DC business groups are asking the council to reconsider it.
ASAE and a coalition of other business groups in the nation’s capital are urging the DC Council to reconsider a 3 percent sales tax on advertising that could impact any company or industry that advertises in the District.
The advertising tax is part of the Fiscal Year 2021 budget approved in a preliminary Council vote on July 7. The Council is scheduled to hold two more votes to fully finalize the budget on July 21 and then July 28.
DC Council Chairman Phil Mendelson proposed the 3 percent advertising tax before the first budget vote last week after some Council members had floated the idea of a 10 percent tax. Mendelson said the tax is projected to raise $18 million in revenue annually in a city where businesses are struggling to weather the COVID-19 pandemic.
DC Mayor Muriel Bowser had proposed a balanced budget for Fiscal Year 2021 that did not raise any taxes and suggested to the Council it would be “foolhardy” to raise taxes during the current crisis. In June, ASAE and numerous other DC-based organizations also filed comments with the Council opposing new taxes on local businesses.
ASAE said there are many questions about how the new tax would be calculated. The legislation defines advertising services 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.”
Other jurisdictions across the country have considered a digital advertising tax in recent weeks, including New York and Maryland. Maryland’s proposed tax, which would have been imposed at rates ranging from 2.5 to 10 percent on gross revenue from advertising in the state, was vetoed by Governor Larry Hogan in May.
ASAE is asking that DC-based associations that oppose the ad tax use a new portal to weigh in on the issue with the DC Council before its July 21 and 28 votes.