Urban One is backing a decision by the Washington, DC City Council to abandon its plan to adopt a 3% sales tax on advertising services beginning Oct. 1. The company, which is headquartered in suburban Silver Spring, MD has strong ties to the market where it operates seven radio stations and holds a minority interest in MGM National Harbor. Urban One joined a consortium that lobbied D.C. Council members to reject the proposal, saying local media outlets are already reeling from the economic impact of COVID-19.
"We have been partners with the residents of the District for over 40 years and consider ourselves part of the fiber of the city and the DMV. This pandemic has devastated and disrupted all of our lives, and the advertising tax would have been like adding salt in the wound," said Urban One CEO Alfred Liggins. "Thankfully, our representatives were willing to listen and act. Hopefully, we will not have to repeat this exercise again regarding an advertising tax, which would cause unnecessary harm to the people we all serve."
Urban One owns hip-hop/R&B “93.9 Kiss FM” WKYS, adult R&B “Majic 102.3” WMMJ and its simulcast WDCJ (92.7), gospel “Praise 104.1” WPRS-FM, sports “The Team 980” WTEM, “News Talk 1450” WOL and gospel “Spirit 1340” WYCB in the Washington metro.
The effort to pass a tax on advertising services in Washington, DC came up short after the lead backer on the D.C. City Council removed the proposed tax from the city’s fiscal 2021 budget. The proposal would have raised an estimated $19 million next year. But after the pushback from broadcasters, media outlets, and the spectrum of businesses that buy ads, City Council Chairman Phil Mendelson scrapped the idea, saying the city had enough money left over from the current fiscal year to eliminate the need for an ad tax in 2021.
Mendelson said he now “regrets” proposing the new ad tax, but not for a belief that taxing advertising services is a bad idea. “I overestimated the effect my proposing this tax would have to discourage colleagues’ desire to raise other taxes,” he said. “At issue, fundamentally, is whether our Council will succumb to dubious demands to tax-and-spend.” He made no mention of the pushback from the business community as the Council looks to finalize the $8.6 billion spending plan.
Similar to Urban One, the National Association of Broadcasters was also actively lobbying against the proposed ad tax. NAB President Gordon Smith called it a “major win” for local media, advertisers, consumers, and commerce.
“The outpouring of opposition expressed by local media companies and citizens in D.C. and across the nation effectively defeated the tax, which would have placed an undue burden on small businesses and local media already struggling amidst the pandemic,” said Smith. “This should serve as an example for other local governments that such misguided taxes on advertising are counterproductive in stimulating local economies and will continue to be met with fervent opposition.”
As the COVID-19 pandemic has cut the financial legs out of state budgets coast to coast, critics of the ad tax worry that the fight that just played out in D.C. will occur in more statehouses. Already four states, including South Dakota, New York, Nebraska and Maryland, have this year considered changing the current tax-exempt status for advertising. So far, none of the proposals have been approved.