WASHINGTON (FOX 5 DC) - Mayor Muriel Bowser is urging the D.C. Council to reject a new tax she says makes it “much tougher” for businesses to survive the coronavirus pandemic.
At issue? A three percent tax that the council is considering on all advertising. It’s an idea experts say could be a “business killer” at a time when it’s already hard to make ends meet.
This proposal affects all broadcasters – including FOX 5 – but also, local newspapers, radio stations, digital platforms, and businesses who advertise on them. There is no advertising tax in the District now, but experts tell us if that changes, costs will be passed onto you – the customer.
Sales taxes, gas taxes, even hotel taxes are nothing new, but what about taxing the very advertising, that gets people to spend money on things?
“This helps nobody and it certainty hurts everybody in D.C,” Dan Jaffe told FOX 5 on Monday.
Jaffee, of the Association of National Advertisers, is leading an effort to stop a new 3 percent advertising tax being considered by the council.
"These companies will be not able to absorb these taxes, it’s going to hit all media, all businesses and then be passed onto consumers,” said Jaffe.
He’s not alone. Television stations like FOX 5, the Washington Post, and the D.C. Chamber of Commerce are warning a D.C. ad tax would be “economically devastating” during a pandemic.
"We have over the years broadened our sales tax to include other services,” D.C. Council Chairman Phil Mendelson.
Mendelson proposed the new tax, which he claims would generate $18 million for all kinds of new spending.
"I don’t agree that a 3 percent sales tax is going to drive away advertising,” said Mendelson.
Nevertheless, Bowser is urging the council to reject the three percent D.C. ad tax. In a letter to the D.C. Council, she cautions “small businesses have already suffered significant losses.”
"I don’t think that the council needs to raise taxes to balance a budget that continues to invest in D.C. priorities and values,” said Bowser.
Bowser went onto call the ad tax “particularly ill-advised” given the economic crisis caused by the pandemic.
Experts say the ad tax is also as a "pyramid tax" on each step of planning, production, and ad buys. As for companies? They’ll likely pass the tax’s cost to customers with higher prices.
The D.C. Council is set to hold a final vote on Tuesday.