In an effort to reduce a projected budget shortfall, Washington D.C. was proposing to create a  tax on advertising revenue as a way to generate up to $18 million in new revenue to the city.  The Washington Post reports that the 3 percent advertising tax was among a list of last-minute tax increases authorized by the city council when lawmakers cast their first budget vote on July 7.  D.C.’s total budget shortfall is projected to be $800 million.

Interestingly, efforts to fight against the tax were led by local newspapers, including The Washington Post, along with marketing groups, business groups and several of the city council members. The argument was the tax would hurt small businesses already struggling from the effects of the Covid epidemic.

Ultimately, Phil Mendelson, the Chairman of the D.C. council, who originally made the tax proposal, announced he was abandoning the advertising tax and the city would find other means to make up for the loss of projected revenue.

Insider’s take:  If the  D.C. Council does vote in the new advertising tax it would certainly be headed for a court battle similar to Cincinnati and Baltimore.  We will provide more updates on this next week.

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