Sunday, March 07, 2021

A New Movie/TV Tax ?

Think about all the ads showing up while scrolling through social media, including numerous promos for movies and TV series. In the United States, Maryland recently proposed those ads be taxed. Many states followed suit and agreed. Even for those who live outside of the States, this could directly impact you as a consumer :

What is Digital Advertising Tax? 

Maryland became the first state to enact the digital advertising tax. It is meant to impact larger companies like Google, Facebook and Amazon. Other states have also expressed interest. 

The law sets a 2.5% tax on money generated from digital advertising services. The more an ad earns, more tax needs to be paid. The rate could increase to 10% on companies that make more than $15 billion. 

But the law is going to face many difficulties before it can be completely established.

Why Was It Proposed 

Lawmakers behind the bill said it was proposed out of concern. Recently, companies like Amazon and other Silicon Valley brands, have had a massive increase in business. They are reportedly not paying a fair amount in taxes either. 

The senator of Maryland, Bill Ferguson, also stated tech companies make money by showing targeted ads. Targeted ads are also allowed in Canada, as long as they do not use sensitive, personal data. Ferguson wants companies to pay for those targeted ads. 

How Much Will It Make  

In Maryland, the amount of revenue expected to be collected from the digital advertising tax is about $250 million- in the first year alone. The money is expected to go towards the state's education.

Who Opposes It? 

The Internet Association, a trade group representing leading global internet companies on matters of public policy, is  against this law. They believe the law will cause more issues than it solves, including harming smaller online businesses that rely on digital ads to get their names out to the public.

The Association for National Advertisers is also against this law. The group believes that it will create a very competitive advertising arena, which could cause damage to many businesses. Many companies have even filed a lawsuit against the state.


In 2016, the Permanent Internet Tax Freedom Act was signed into law. It prohibits states from applying taxes to the internet. It also prohibits discriminatory taxes on e-commerce. 

The law that Maryland proposed is in violation of the tax freedom act. If the state were to tax advertising, this would lead to consumers  paying higher prices. 

Similar Laws are Appearing Elsewhere 

Other States 

Indiana and Connecticut are two other states who are attempting to introduce similar laws. As more places adopt these laws, it is more likely to spread further. Still, the laws are being examined by legislation and continuously reworked. It is unclear what the final tax would look like right now. 


Digital tax laws against big businesses are also starting to appear in Europe, with many large digital companies getting tax exemptions for their advertising. France provided its own digital services tax in 2019. 


Canada is now planning to start taxing digital ads by 2022. These would affect tech giants, including Google and Facebook. Until then, digital services are expected to be taxed.

Are Streaming Services Taxable? 

It depends on where you live. In certain states within the U.S. and Canada, streaming services are now taxable. In Canada, the federal government is planning to have foreign-based tech companies, inluding Netflix, charge a sales tax to their users. 

If streaming services have to pay more, many are speculating the cost will be forced onto consumers. 

These rules will apply to digital marketplaces and rental accommodations from Airbnb. However there is still time before these taxes are introduced next year.


Each time you click on a digital ad, you are making money for a business. The law that Maryland proposed would start taxing the revenue generated from those advertisements. While it is not yet active in Canada, there is reporting about similar laws starting up soon, that will lead to consumers paying more to stream their favorite films and TV series.