D.C. Council Passes FY 2021 Budget Without an Advertising Tax

D.C.-based businesses and events, including The Washington Auto Show, won a major victory late last month, as the D.C. Council passed a 2021 budget that does not include a tax on advertisements.

Seeking to fill a multi-million dollar budget gap caused by the COVID-19 pandemic and ensuing economic fallout, the council had considered making digital advertising subject to a 3 percent sales tax, as well as billboards and television commercials. Mayor Muriel Bowser was an early opponent of the proposal, but for a while it looked as if it could garner the support of at least 8 of the city’s 13 council members.

Area businesses and advocacy groups mobilized against the tax, successfully arguing that it would imperil city-based businesses trying to survive during the pandemic, while also potentially creating a system in which D.C.-based businesses could be charged for advertising that was targeted outside of the city, while suburban-based businesses would not.

On July 23, the city council voted 11 to 2 to pass the final FY 2021 budget, without the $18 million or so in revenue that the advertising tax was projected to generate.

Earlier this year, the Maryland General Assembly passed a scaled digital advertising tax on businesses with more than $100 million in annual revenue; it was vetoed by Gov. Larry Hogan. The General Assembly, where Democrats have veto-proof majorities in both chambers, could still override the veto, either in a special session this fall (if one is called) or next January when the legislature is set to convene.

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