Opinion: Will Maryland tax digital publishers—and its citizens—to death?
In an historic example of imperious government running amok, legislators—sequestered behind closed doors and ignoring the crisis of historic proportions that was bearing down on them—passed a last-minute tax bill that would further strain the economy and deny its citizens essential services in their direst moments.
You might assume this refers to the English Parliament passing the Stamp Act of 1765 and setting off the American Revolution. Unfortunately, it happened three weeks ago in Annapolis, when the Maryland General Assembly, in a frantic rush to adjourn and take shelter from coronavirus, voted to pass HB 732—a tax on advertising akin to the Stamp Act.
The bill was innocuously called the Digital Advertising Gross Revenues Tax. But it might as well be called the Maryland Tax on Critical Health and Safety News. Because that will be its effect: to break the backs of struggling news organizations, and the small retailers and other businesses that communicate through them, at the very moment every Marylander needs to know how to stay safe during the worst pandemic of modern times.
There’s nothing like a global crisis to force a polarized citizenry to move beyond politics and judge for themselves what really matters. And, after years of contentious debates about “fake news,” the right, the left and the center can at least agree on one thing: When people are gasping for breath and dying, real news matters. Where are the ventilators? Where can we find soap? What does “shelter in place” really mean? Can I walk my dog safely? Can I visit my elderly Mom?
Real news organizations—whose reporters, editors, producers and programmers are putting their lives on the line every day—are the enterprises best placed to answer those and the myriad other questions that, during the next several months, literally will make the difference between life and death for Marylanders.
In turn, those media companies are the primary conduit by which local businesses, from soap sellers to dog walkers to eldercare experts to the Government itself, advertise goods and services to their customers. Americans need the news and its advertisers to survive.
The sponsors of the Maryland Tax on Critical Health and Safety News chose to ignore these needs. They thought they were being clever and only taxing big, rich Californian companies like Google and Facebook. Unfortunately, the bill stretches its tentacles across local TV stations, newspapers, digitally native news organizations and even the entertainment companies that are keeping your kids occupied while you worry about how to find them food without getting infected yourself.
What will this legislation look like in practice?
For consumers, it will mean more paywalls for the educational content, productivity tools, news and entertainment you rely on. For small businesses trying to reach their customers and drive sales, it will mean higher advertising costs. And for publishers reliant on advertising revenue, it will mean an additional tax that would otherwise be spent on producing valuable journalism, content and services for their audiences.
Nearly every business in Maryland relies on digital advertising to reach its customers, and that reliance is only increasing. A tax on digital ads will drive up the cost for Maryland businesses to reach their customers while pummeling their sales. The only way these businesses will be able to survive the tax is by passing its costs to you—you know, the people who are worried about keeping your own jobs during a two- or three- or four-month lockdown. At a time when Maryland’s unemployment rate is reaching all-time highs, the Maryland legislators are working against the citizens to whom they are held accountable.
The bill’s sponsors have countered these arguments by claiming the tax would be an important revenue generator for the state, electing to bury a report from the Maryland Attorney General that recognized a “real risk” that their initiative violates federal law and will never provide a dime to the state government.
At a time when 70 percent of advertisers have already decreased or paused their advertising in light of the current economic crisis—which is predicted to have a more significant impact on advertising than the 2008 financial crisis—an unprecedented tax of this magnitude is deadly. It will kill businesses, jobs … and worse.
We urge Governor Larry Hogan to veto HB 732 when it reaches his desk. And we ask every member of the Maryland General Assembly to consider the mounting evidence against this Maryland Tax on Critical Health and Safety News. Maryland’s businesses and consumers need real news now.