In the Washington state Senate’s tax bill, SSB 6113, a small paragraph poses devastating consequences to our communities: it would create a new tax on advertising that has until now been intentionally exempted.
This would impact advertising in:
• newspapers
• billboards
• large stadiums
• community ballparks
• county fairs
• in-store displays
• naming of public spaces
Giving a newsletter shoutout for your event sponsor? Taxable.
Put your small business on the tabletop of the diner? Taxable.
Hang a banner over the Little League chainlink fence thanking Bob’s Plumbing? Taxable.
Want to name a university’s or nonprofit’s building or athletic field after a large donor? Taxable.
Section 27 of the bill would remove the exemption that has been provided to all of the above if the state loses a lawsuit filed by Comcast.
It’s our expectation that Comcast will win their lawsuit because, as the tech giant contends, last year’s law imposing taxes on digital advertising violates federal law because it does not apply the tax to all advertising services in the same manner, and it is in conflict with the federal Internet Tax Freedom Act, which bars states from imposing “discriminatory taxes” on electronic commerce. This would cost the state nearly a half billion dollars.
Imagine that. The Senate is threatening to tax small businesses and nonprofits in advance, based on a fear of losing a lawsuit over a different tax. The House had a similar provision in their companion bill but saw fit to remove it. If the Senate’s version wins the day, it will pass into law.
Once implemented, it is not hyperbole to say that it will be devastating to the local news industry. Newspapers will close and communities will suffer the loss of locally-focused news generated by trained journalists.
Newspapers operate on incredibly thin margins. Over the past year, Washington state has seen five newspapers close. The lack of a tax on advertising has been crucial to the survival of those who remain. While digital news providers are increasing in number, they are too few and far between to take the place of the journalism ecosystem in place for two centuries in communities across this state.
This tax would be devastating to those operating on the razor’s edge.
Beyond newspapers, the burden of this tax will fall to every broadcaster, school, nonprofit, club and small business that relies on advertising or sponsors. This will even hurt sports teams like the Storm and Rain, which operate on thin margins.
The Washington Newspaper Publishers Association has joined a coalition of large companies, community businesses, public colleges and universities and nonprofits asking the state legislature to remove Section 27 from SSB 6113, calling it a “poison pill that could yield a dramatic tax increase on our organizations … This expansion would reduce marketing activity, slow local commerce and weaken the very community institutions that keep Washington informed and connected.”
We urge readers of this newspaper, businesses who advertise in it and the nonprofits whose stories our writers have shared over the years, to call and email their state legislator. Share the widespread impact of this potential tax to you, your business and your community. And ask that Section 27 be removed from SSB 6113.
Find your legislator and contact them here: https://leg.wa.gov/legislators/.
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Ellen Hiatt is the Executive Director of the Washington Newspaper Publishers Association.
