SAN FRANCISCO, Feb 13, 2021 (BSS/AFP) – Maryland on Friday became the
first US state to tax digital ad money taken in by internet giants.
Legislators in the state senate mustered enough votes to override a veto by
Republican Governor Larry Hogan, who had sought to derail the tax on revenue
taken in from online ads shown in Maryland.
“It’s all about taxes and no results,” Hogan said in a video posted at
Twitter.
“This is not the end of this fight, this is the only the beginning. It
cannot and it will not stand.”
The tax is expected to be challenged in court.
Supporters of the tax, money from which is to be funneled into education,
touted its passage as a victory for schools that have gone underfunded while
internet firms have raked in fortunes from targeted ads.
Hogan vetoed the bill last year, contending it would raise taxes on people
already struggling due to the pandemic.
A tax bite of up to 10 percent would be taken from the portion of digital
advertising revenue resulting from internet use in the state.
“Maryland will become the first state in the country to make sure big tech
pays their fair share while making billions of dollars a year using our
personal data to sell digital ads,” state senator Bill Ferguson said in a
Facebook post supporting the bill.
The tax targets companies that make over $100 million a year from digital
advertising, according to Ferguson.
Facebook and Google dominate the digital advertising market, bringing in
billions in revenue annually. E-commerce colossus Amazon has been scaling up
its digital ad business.
It was estimated the tax could bring in $250 million to government coffers
in its first year.
Other states were expected to follow suit in taking aim at internet giants
that have built financial empires on free services supported by targeted
advertising.
Countries including Austria, Britain, France and Spain have pursued digital
services taxes.
The administration of US President Joe Biden has expressed support for a
proposed global tax on digital giants such as Amazon, Facebook and Google.
The legality of the digital ads tax in Maryland was expected to be
challenged in court.
“Maryland now has the dubious honor of being the only state in the country
to have ever passed such a flawed tax,” said Internet Association trade group
vice president Robert Callahan.
“At least Maryland businesses and consumers can rest easier knowing that
the courts will have the last say on this matter, and that the law, not
politics, will decide the outcome.”