|Tax Issues May Loom Large in 2021Regular readers of Government Report will recall that in the winter and spring of 2020 the Maryland General Assembly passed a tax on digital advertising which was then vetoed by Governor Larry Hogan (R). Leaders of the Senate and House of Delegates have stated their intention to conduct votes in the 2021 legislative session to override the Governor and enact the tax into law. Because Democrats hold super-majorities in both chambers the advertising industry is facing an uphill fight to convince enough lawmakers to vote to sustain the veto and kill the tax.AAF, AAF Baltimore and AAF Greater Frederick are working with Marylanders for Tax Fairness, a broad industry coalition opposing the digital ad tax. AAF members are contacting Maryland lawmakers directly to ask them to vote to sustain the Governor’s veto. AAF Baltimore President Matt McDermott joined with leaders of the Maryland Press and Broadcasters associations to pen an op-ed explaining the importance of killing the tax.In Washington, State Representative Vandana Slatter (D-Bellevue) has released a preliminary draft of a bill tax would tax digital advertising. AAF has issued an alert to our Washington members urging them to express early opposition to the proposal in the hopes that it will not be introduced.
Given the budget crunch that most states are facing due to the Covid-19 crisis AAF anticipates we could see multiple efforts to tax advertising, either digital or all advertising. Unlike the Federal Government, nearly every state is constitutionally obligate to balance their budgets and cannot run a deficit. As of this writing, it appears likely that any Federal Covid relief bill will not include aid to state and local governments, which only make their search for new sources of revenue more likely.