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Say No to D.C.‘s Ad Tax!

The D.C. Council on Tuesday, July 7, granted preliminary approval of a new, devastating 3% sales tax on advertising and sales of personal information.  This new tax would be levied on the planning, creation, placement, and display of advertising in print, broadcast, and digital media.  Fearing a public outcry, the Council released the new $26 million annual tax less than 18 hours before unanimously voting in favor of it.

A coalition of media organizations and other affected businesses have been working tirelessly to tell the Council how this will affect news coverage and their businesses.  Click for the Open Letter to the Council, and for the editorial coverage of this issue.

Tell DC Council members to say NO NEW AD TAX.  Click here.

What are the implications of this tax?

Crippling effect on D.C.’s local media organizations.  Newspapers, magazines, radio and television stations
depend primarily on the sale of advertising. Their profit margins are razor thin.  News media serve an
extraordinarily important, essential public service role.  Washington D.C.’s news media outlets have worked
tirelessly to keep us informed during the COVID-19 pandemic.  Local media, like so many businesses, face
remarkable challenges.  Advertisers provide essential revenues for radio stations, television stations, newspapers and magazines.  While the public constantly, is reading, watching and listening to local and national news for the latest information, the businesses that advertise in our papers and on our stations have had to make tough
decisions to reduce their advertising dollars to survive.  This is creating a domino effect as the revenue streams of local media companies are drastically reduced, putting even more stress on the ability of newspapers and broadcasters to serve as “first informers.”  

A regulatory and enforcement nightmare. This tax will threaten the survival of small agencies and media
companies as they struggle to operate with limited resources.  It also raises significant questions of equity in
implementation because it will allow giant companies, such as Facebook and Google, to grow even more
dominant. In light of the complexity, scope and diversity of advertising activities within the District and the
substantial levels of advertising generated outside the city limits but received in DC, regulatory enforcement
will be extremely difficult, complicated, time-consuming and expensive. 

Disastrous for small business & charities.  The proposed tax strikes publishers and news media but the tax really will be paid by small businesses and consumers.  News media often provide discounted or pro bono advertising to charities.  This tax makes that untenable. Advertising helps build relationships and trust between consumers and businesses.  This tax forces business owners to reconsider where they spend their limited dollars – on
building relationships with consumers, PPE, sanitization, workforce development or other areas, making it much more difficult for businesses to reopen. 

Ambiguous tax implications. The sales and use tax is supposed to be a consumption tax imposed on an end product, not a tariff on an intermediate service such as advertising.  Advertising is a communications process that helps produce the final sale of a product – a product that most likely is subject to a sales tax, thus layering tax upon tax.  Ironically, less advertising – leading to fewer sales – could actually lead to reduced sales tax
revenue. More than 100 proposals to tax advertising have been put forward in more than 40 states and localities in the past five decades. Each one has been soundly rejected or abandoned as economically unsound and
counterproductive.

Constitutional issues around free speech. There also are serious concerns about the legality of the bill and may be subject to a court challenge and subject to injunctive relief.

Stand with local news media and reject the Ad & Personal Information Tax.

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