Baltimore Maryland’s Outdoor Advertising Excise Tax
The U.S. Supreme Court has declined to review a Maryland Court of Appeals case that ruled the City of Baltimore’s outdoor advertising excise tax is constitutional.
The taxpayer owns and operates hundreds of billboards subject to the tax. Under the ordinance, the tax is imposed on the privilege of exhibiting outdoor advertising displays in the city. Specifically, the tax is levied upon an advertising host, including a person who owns or controls a billboard, posterboard, or other sign, and charges fees for its use as an outdoor advertising display.
How the Tax is Assessed
- The tax is assessed based upon:
- The size of the display
- Whether it is an electronic display
Legal Basis and Constitutionality
- A tax related to the sale of advertising on billboards is within the city’s taxing power and is entitled to a strong presumption of constitutionality.
- Differential taxation of media is subject to heightened or strict scrutiny under:
- The First Amendment
- Maryland Declaration of Rights
This scrutiny applies when a tax suppresses or threatens particular ideas or viewpoints by:
- Singling out the press
- Targeting a small group of speakers
- Discriminating on the basis of the content of taxpayer speech
Findings of the Maryland Court
- No evidence shows the ordinance was designed to censor or exert a prior restraint on the press.
- The taxpayer’s billboard is primarily a commercial advertising vehicle, not part of the press akin to a newsgathering organization.
- The fact that only four taxpayers are affected stems from market conditions—not the structure of the ordinance. For example:
- The city banned construction of new billboards 20 years ago, effectively barring new entrants from challenging the taxpayer’s near-monopoly.
On-Premises vs. Off-Premises Distinction
- A distinction between off-premises and on-premises signs in a regulatory or tax law does not discriminate on content.
- Therefore, it does not trigger heightened or strict scrutiny.
Case Reference:
Clear Channel Outdoor, Inc. v. Director, Department of Finance of Baltimore City, Md. Ct. App., No. 9, September Term, 2020, 03/15/2021, cert. denied, U.S. S. Ct., Dkt. No. 21-219
Frequently Asked Questions
What is the purpose of Baltimore’s Outdoor Advertising Excise Tax?
The tax is imposed on those who exhibit outdoor advertising displays in Baltimore. Its purpose is to generate revenue by taxing billboard owners or controllers who charge for ad space, based on the size and type (electronic or static) of the display.
Who is subject to the outdoor advertising excise tax?
The tax applies to advertising hosts, anyone who owns or controls outdoor signs, including billboards and posterboards, and earns income from allowing others to use them for advertising purposes.
Does the tax violate First Amendment rights?
No. Courts found that the tax does not target specific ideas or viewpoints, nor was it intended to censor. The Maryland Court of Appeals concluded it was a content-neutral tax on commercial advertising.
Why are only a few companies affected by the tax?
The limited number of affected taxpayers is due to market conditions. The city banned new billboard construction two decades ago, leading to a near-monopoly among existing operators rather than selective enforcement of the ordinance.
How does the law distinguish between different types of signs?
The law differentiates between on-premises and off-premises signs, which is a content-neutral distinction. This means it regulates based on location and function, not the message displayed, and therefore doesn’t trigger stricter constitutional scrutiny.