• by Wendy Davis  @wendyndavis, March 11, 2025

Ad industry organizations, cable lobbyists and other business groups are urging Maryland lawmakers to reject a proposal to charge businesses a tax on services used by other businesses, such as advertising and data processing.

“By increasing the cost of advertising, this tax will discourage companies from marketing their products and services, resulting in lower sales, job losses, and a weaker local economy,” the Association of National Advertisers, Interactive Advertising Bureau, American Association of Advertising Agencies, American Advertising Federation, the Maryland Chamber of Commerce, NCTA--The Internet & Television Association and others argue in a statement issued Tuesday.

“Additionally, local media outlets -- already facing financial challenges -- would see their advertising revenue shrink, potentially leading to job cuts and reduced news coverage for Maryland communities,” the groups add.

Their statement comes in response to Maryland House Bill 1554 and Senate Bill 1045, introduced late last month, which would impose a 2.5% tax on business-to-business services. If enacted, the bill reportedly would result in an estimated $1 billion in revenue for the state.

The groups opposing the bill say it “would have a devastating impact on real people.”

“Instead of fostering economic expansion to increase revenue, taxing advertising will suppress business activity, leading to reduced sales, lower tax collections, and further economic contraction,” they write.

The Maryland House Ways and Means committee and Senate Budget and Taxation committee are scheduled to hold hearings on the bill Wednesday.

If passed, the new tax would take effect in July.

Several years ago, Maryland passed a first-of-its-kind tax on digital ad sales. That measure taxes companies with more than $100 million in digital ad revenue, with tax rates varying from 2.5% to 10% of revenue attributable to Maryland.

That law faces an ongoing court challenge by the Chamber of Commerce and others.