Dear MDCD Member:
We write tonight on the final day of the Maryland General Assembly’s legislative session to report on good news for broadcasters regarding Maryland’s first-in-the-nation Digital Advertising Tax.
Specifically, the General Assembly today passed an amendment to the Digital Ad Tax, Senate Bill 787, that “carves out” from the Ad Tax’s purview those broadcasters (and other news media entities) that would otherwise be subject to the Ad Tax by virtue of reaching the law’s dollar thresholds.
MDCD advocated consistently and doggedly for Senate Bill 787 – the amendment to the Digital Ad Tax – for months, which was sponsored by Senate President Bill Ferguson and House Majority Leader Eric Luedtke. We are pleased to report on its passage tonight. Senate Bill 787 will now be sent to Governor Hogan.
By way of background, you may recall that the Maryland General Assembly passed House Bill 732, the Digital Ad Tax, back in March 2020. Governor Hogan vetoed the legislation in May 2020, but the General Assembly voted to override the Governor’s veto in February of this year. Senate President Ferguson, who also sponsored the Digital Ad Tax, has stated repeatedly that his goal with the Ad Tax is to target large tech companies like Google, Facebook, and Twitter – not traditional media like broadcasters, newspapers, and the like.
You may also recall that the Digital Ad Tax operates as follows:
For companies with annual gross revenues (from all sources) of $100 million or more, the legislation imposes a tax of between 2.5% and 10% on a company’s annual gross revenues derived from digital advertising services on digital interfaces in Maryland, provided the company has at least $1 million in annual gross revenues derived from digital advertising services in Maryland. The Digital Ad Tax legislation considers “digital advertising services” to mean things like ad services on a digital interface, including banner ads, search engine advertising, interstitial advertising, and the like; digital interfaces are websites, applications, etc.
As written, the Digital Ad Tax law would have swept certain broadcasters within its reach. That, according to Senate President Ferguson, was never the aim. After hearing from MDCD and many of its Member Stations, Senator Ferguson authored and sponsored Senate Bill 787, which exempts from the Digital Ad Tax those digital advertising services owned and operated by broadcasters (defined as entities that are primarily engaged in the business of operating a broadcast television or radio station) and other news media entities.
Senate President Ferguson introduced Senate Bill 787 in February; the amendment was the subject of numerous Committee hearings, as well as debate on the floor of both the House and Senate. MDCD testified at several hearings, and MDCD and many Members provided written testimony in support of Senate Bill 787.
Senate Bill 787 passed the House Friday. We are pleased to report it passed the Senate today.
This is a big win for the broadcast industry in Maryland, both because it protects broadcasters from being subject to the Digital Ad Tax, and because it shows that the General Assembly recognizes the difference between local broadcasters and newspapers (and the important public service they provide in their communities) – and those entities that are the targets of the Digital Ad Tax. We thank the amendment’s sponsors and the General Assembly for supporting the passage of Senate Bill 787.
MDCD Legal Counsel