Reverses course on 3% ad services tax
As expected, the D.C. City Council has voted unanimously, according to the Association of National Advertisers, to excise a 3% tax from a budget bill.
The council Tuesday (July 7) had voted tentatively to approve the portion of a massive budget bill that included a 3% sales tax on advertising services, which were defined 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.”
But last week, after pushback by the Association of National Advertisers, broadcasters and others, including council members, the Council chairman Phil Mendelson switched gears and introduced amendments that would essentially kill the tax.
ANA was celebrating Tuesday. It has been working to keep ad taxes of the books for over three decades. Ad sales and services taxes tend to surface as often cash-strapped localities look for new revenue sources, as was the case here. So far, none have made it into law.
“At a time when small businesses are already navigating an extraordinarily tough economic landscape amid the global pandemic, this is an important step in protecting their ability to promote and sell their products in the District,” said Dan Jaffe, ANA executive VP of government relations. “It will also see that these costs are not passed onto consumers. Today’s victory is a result of the wide-ranging efforts of the ad and business community to communicate their deep concerns on the counterproductive tax.”
“IAB commends the DC Council for their unanimous repeal of the proposed 3% tax on advertising,” said Alex Propes, VP at the Interactive Advertising Bureau. “In today’s economic climate, a tax on advertising would cause unbearable strain on the media and advertising industry. In turn, every small business across the District would be negatively impacted.
“As lawmakers across the U.S. seek to hasten the economic recovery from COVID-19, they should acknowledge the critical role that advertising plays in driving commerce and helping businesses, non-profits, and governments communicate with their customers and stakeholders.”