Ad Industry Urges Washington, D.C. To Scrap New Tax Proposal

A proposed new 3% tax on advertising and the sale of personal data in Washington, D.C. will have “profound harmful effects on virtually all businesses in the District,” the media and advertising industries are telling lawmakers.

“As you know, all businesses -- and particularly businesses involved in marketing -- are struggling to survive a once-in-a-century pandemic and its accompanying economic crisis,” the organization ADvertising Coalition writes in a letter sent Friday to Washington, D.C. City Council members. “The last thing D.C. companies need is another unexpected expense as they try to hold onto employees, replenish supplies and inventory, and devote their remaining resources to reopening and rebuilding their businesses and customer bases.”

The letter was signed by broadcast networks ABC, Comcast NBCUniversal, Fox and ViacomCBS, as well as the American Association of Advertising Agencies, American Advertising Federation, Association of National Advertisers, MPA -- The Association of Magazine Media, National Association of Broadcasters, NCTA -- The Internet & Television Association, and News Media Alliance.



They are urging the city to scrap a proposed new 3% tax on “advertising services,” “digital advertising services,” and on the sale of “personal information.”

The proposed ad tax, which is part of a larger proposed budget, is slated for a vote Tuesday. A summary of the proposed budget estimates the ad sales tax will bring in an additional $18.4 million in Fiscal Year 2021.

The measure, put forward by District of Columbia City Council Chair Phil Mendelson, 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.”

“Digital advertising services” is defined as “advertising services related to advertisements displayed on a digital interface, including advertisements in the form of banner advertising, search engine advertising, interstitial advertising, or other comparable advertising.”

And the bill characterizes “personal information” as names, addresses, Internet Protocol addresses, biometric information, and “browser habits, consumer preferences, and any other data that can be attributed to a person and can be used for marketing, or determining access or costs related to insurance, credit, or health care.”

The media and ad organizations contend the new tax “will inevitably lead to a pyramiding tax, which could induce those able to do so to utilize services outside the District.”

The organization continues: “In this difficult economic environment few businesses will be able to absorb these incremental costs and will have to pass them onto consumers. Because consumers today are reluctant to engage in commercial activities, adding this ad and data tax will create yet another disincentive for sales and consumer purchases.”

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