Maryland digital advertising tax raises questions locally

Published: Feb. 25, 2021 at 7:49 PM CST
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SIOUX FALLS, S.D. (Dakota News Now) - The state of Maryland recently passed a 10 percent tax on revenue from online ads, and this has locals involved in advertising curious about possible ramifications.

The bill’s supporters say it is targeted towards big tech companies, such as Facebook and Twitter, but the cost could fall back on to the small businesses.

“What’s going to end up happening is the local businesses are going to end up absorbing that cost,” said Maggie Saugstad, the executive director for the South Dakota Advertising Federation.

Due to the lower prices, and ability to directly reach the target demographic, a lot of small businesses have turned to this form of advertising.

“A lot of small- and medium-sized businesses rely heavily on digital advertising,” said Mark Glissendord, a partner with Lawrence and Schiller in Sioux Falls.

According to CNN business, that tax is expected to generate an estimated $250 million in revenue the first year, but it may create some regulation issues down the road.

“All of a sudden you have every state across the nation that are going to implement this tax. Each at their own rate and level, it becomes a mess,” said Saugstad.

Similar advertising bills have come across the desk of South Dakota legislators.

“All have failed and the reason is because of the chilling effect it has on business,” said Glissendorf.

South Dakota is not currently hearing any bills involving an advertising tax, but for now, all eyes remain on Maryland.

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