Internet groups, U.S. Chamber sue Maryland over digital advertising tax (updated)
18/02/2021 22:16
(Adds state senator comment, Facebook comment)
By David Shepardson
WASHINGTON, Feb 18 (Reuters) - A group representing
Amazon.com Inc AMZN.O , Facebook Inc FB.O and Alphabet Inc
GOOGL.O joined the U.S. Chamber of Commerce and others in
filing suit on Thursday to challenge Maryland's first-in-the
nation new digital advertising tax.
The Chamber, the largest U.S. business group; the Internet
Association, which represents dozens of tech companies; the
Computer & Communications Industry Association; and NetChoice
filed suit in U.S. District Court in Maryland seeking an
injunction to block the new tax adopted last week by the state
legislature over the veto of Republican Governor Larry Hogan.
The suit calls the law "a punitive assault on digital, but
not print, advertising. It is illegal in myriad ways and should
be declared unlawful and enjoined."
State lawmakers estimate the tax could raise as much as $250
million a year after it takes effect. Other states are also
considering taxing digital advertising.
Maryland State Senate President Bill Ferguson said in a
statement it was "disappointing to see these companies spend
millions on high-powered attorneys instead of paying their fair
share."
The suit argues the act will reduce "resources to support
the creation and availability of high-quality ad-supported
content, leaving the online field overrun by low-quality 'junk'
content."
The suit also challenges the tax's "punitive character,
including its severity (up to 10% of gross revenues) (and) its
focus on extraterritorial conduct."
The law covers companies with global digital ad revenues of
at least $100 million. Supporters have said it is aimed at the
largest platforms like Amazon, Facebook, and Alphabet's Google.
Facebook spokesman Daniel Roberts said the company "pays
millions of dollars in taxes to Maryland and supports small
businesses in the state in a variety of ways, so we are
disappointed that the General Assembly would pass such a
punitive law."
The state attorney general's office warned last year there
was "some risk" a court could declare the measure
unconstitutional.
The suit also argued Maryland's tax "exacerbates a foreign
policy dispute with France and other European countries and
makes it impossible for the federal government to speak with one
voice on a matter of foreign policy."
France and other countries view digital service taxes as a
way to raise revenue from the local operations of big tech
companies which they say profit enormously from their markets
while making only limited contributions to public coffers.
(Reporting by David Shepardson
Editing by Sonya Hepinstall)
((David.Shepardson@thomsonreuters.com; 2028988324;))