Skip to main content
Blog Government & Politics Working & the Economy

Senate Debates Bill to Prevent ‘Pass Through’ of Disputed Digital Ad Tax

Lawmakers continued debate Wednesday on exemptions to Maryland’s newly imposed tax on digital advertising.

The emergency bill from Senate President Bill Ferguson (D-Baltimore City) would preclude big tech companies from passing their digital ad taxes on to Maryland small businesses, a major criticism of the first-in-the-nation digital ad tax that the General Assembly passed last month.

“The purpose of the big tech bill was to make sure the big tech guys pay their fair share,” Sen. James C. Rosapepe (D-Prince George’s) said on the Senate floor Wednesday. “We wanted to be sure that there was no unintended consequence here for our local businesses.”

The measure also specifically states that broadcasters and news media would be exempt from paying the tax, and Sen. Justin D. Ready (R-Carroll) questioned why specific businesses were exempted.

“They also are in a different economic situation — local newspapers in particular, but local broadcasters as well, have not done as well as the big tech companies,” Rosapepe said. “What we’re trying to do is have a fair tax system, where the folks who’ve been around a long time, invested in the community, have deep roots in the community, aren’t paying too much of the tax burden compared to those who are taking advantage of this marketplace and making money hand over fist.”

Maryland’s digital ad tax targets tech giants with more than $100 million in annual global revenues that collect personal data. It is expected to yield up to $250 million annually in state revenues and will help fund the Blueprint for Maryland’s Future, a multi-billion education reform bill.

A few days after the General Assembly overrode Gov. Lawrence J. Hogan’s veto of the bill passed in 2020, tech lobbyists and the U.S. Chamber of Commerce sued to prevent the new tax from being collected, arguing that it was “punitive assault” on digital advertising.

Republican leaders also questioned whether it was constitutional to mandate that a private business could not pass a cost onto customers. Rosapepe said that no industry has talked to him about the constitutionality of this emergency bill and that “there are plenty of cases in which there are restrictions on the ability to pass on a cost.”

A legal advice letter sent to Ferguson from Sandra Benson Brantley, counsel to the General Assembly, concluded that the bill “is legally sufficient and constitutional.”

Senate Minority Leader Bryan W. Simonaire (R-Anne Arundel) asked to hold off the debate for one day to address questions that the minority party had.

[email protected]

REPUBLISHING TERMS

Our stories may be republished online or in print under Creative Commons license CC BY-NC-ND 4.0. We ask that you edit only for style or to shorten, provide proper attribution and link to our website. Please see our republishing guidelines for use of photos and graphics.

If you have any questions, please email [email protected].

To republish, copy the following text and paste it into your HTML editor.

License

Creative Commons License AttributionCreative Commons Attribution
Senate Debates Bill to Prevent ‘Pass Through’ of Disputed Digital Ad Tax