The American Advertising Federation reports the District of Columbia City Council unanimously approved their 2021 budget, which includes a three-percent tax on advertising.  This is not a final passage as this was the first of two readings that the budget must go through before it can be enacted.

According to AAF, while a number of amendments to the budget “were considered, none addressed the ad tax.  There was however some discussion of the ad tax and a number of Councilmembers expressed concern about the harmful impact the tax could have on the media – especially on small community newspapers.  Unfortunately, the Council has not conducted a hearing to get public feedback on the proposal.

“It appears from the discussion that the proposal was initiated by Councilmember David Grosso who stated that one of his prime goals is to tax the ads on large digital platforms.

“We will coordinate next steps with local and national industry allies and look for a Councilmember willing to introduce an amendment to remove the tax.  In the meantime, continue to let Councilmembers know of your objection to an ad tax and the harm that it would do to your business and its negative impact on jobs and the economy.”

Specifically, says AAF, here are specifics of the proposed ad tax:

• the proposed Budget Support Act’s advertising service sales tax would apply to “digital advertising services,” which is defined as “[a]dvertising 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.”
• Similar to the Nebraska proposal, but unlike the Maryland and New York proposals, the Council’s proposal expands the sales tax base instead of adopting a separate tax on gross revenues from digital advertising services.
• Finally, unlike each of those proposals, the Budget Support Act’s advertising tax is much broader, applying to all “advertising services,” defined as “[t]he 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.”