How to Bring Maryland's Budget to Heel, Part II
If sales tax applies to the printing of "junk mail," it should also apply to newspaper advertising inserts.
The advertising inserts that accompany newspapers—most egregiously in the Sunday editions—surely equal or exceed the amount of junk mail received weekly by the average household in Maryland. Yet these advertising materials—even if identical to what's included in a mailing, or to circulars handed out in stores—are not subject to Maryland's sales tax because they are "inserted" in a qualifying newspaper.
If the same advertising material were delivered to the public any other way, Maryland sales tax would be applied to the printing bill. It's one thing to make advertisements on the actual pages of newspapers tax-exempt, as arguably it's a good idea to throw a fiscal bone to the actual physical newspapers, which (at least at one time) served a compellingly important role in our democracy. It's quite another to subsidize the promulgation and disposal of paper waste.
The advertising “inserts” have the same tax-free status enjoyed by the newspapers—surely not the intent of the legislators who penned the regulation over 50 years ago. This constitutes a huge cash cow for the state’s larger newspapers, allowing them to offer to advertisers a significant price advantage over competing direct mail advertising; but this unwarranted fiscal boon comes at the expense of the environment, and of the taxpayers who have to pay for the disposal of all this paper waste.
How much revenue could be generated by closing this loophole? Plenty; consider that at least 400,000 Sunday papers are distributed in Maryland each week, to start with; and each one carries about two pounds of advertising inserts; that's 800,000 pounds of paper waste a week—with no tax consequence. Our money-hunting legislators should have no difficulty in calculating the additional sales tax revenue that could be generated by closing this absurd loophole.
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This story was published on October 31, 2007.