Chicagoland Chamber of Commerce Urges General Assembly to Reject Digital Advertising Tax

Chicagoland Chamber of Commerce Urges General Assembly to Reject Digital Advertising Tax  

Digital Advertising Tax Will Hurt Small and Mid-Sized Businesses 

 

CHICAGO – The Chicagoland Chamber of Commerce urges the General Assembly to reject a proposed new tax on digital advertising in Illinois that would increase costs on small businesses, make it harder for businesses to reach customers, and ultimately raise prices for consumers.


The proposal would disproportionately impact small- and mid-sized businesses that increasingly rely on digital advertising as an affordable and effective way to compete, grow, and connect with customers.


A recent survey of Illinois small- and mid-sized businesses found that 73% use digital advertising. Among those businesses, more than 80% said digital ads are important to their company’s success, help them reach new customers, and help them compete with larger companies. Additionally, 84% said digital ads deliver a better return on investment than traditional advertising methods such as television, radio, and print.


“We understand the need to close budget gaps, but a digital ad tax would make it harder and more expensive for businesses to use digital and social media ads to find customers, sell products, and grow their companies,” said Jack Lavin, President and CEO of the Chicagoland Chamber of Commerce. “The big tech companies aren’t the ones who are going to be hurt by this. Costs will be passed on to small and mid-sized businesses, who can least afford it. Digital advertising gives businesses an affordable way to connect with customers, make the most of limited resources, and remain competitive in a challenging economy. Illinois should not make it harder or more expensive for businesses to grow and succeed.”


Illinois businesses are already navigating inflation, tariffs, supply chain challenges, and broader economic uncertainty. Increasing the cost of digital advertising would force many businesses to either scale back customer outreach and growth efforts or pass higher costs on to consumers. Ultimately, a digital ad tax will hurt growth and jobs for small- and mid-sized businesses.


“I see firsthand the real pressure small businesses are under, and a digital ad tax would make one of their most effective tools more expensive at exactly the wrong time. It would mean higher ad prices, reduced reach for the same budget, and increased cost per click,” said Salil Gandhi, Founder, SBO Buzz. “Big national brands already have built-in advantages that smaller businesses don't, so affordable digital advertising is critical for growth and competitiveness. A digital ad tax would only widen that gap and hit hardest the businesses that depend on digital advertising the most.”


Additionally, passing a digital advertising tax will not solve Illinois’ budget issues and has a high probability of making them worse. This proposal likely violates the federal Internet Tax Freedom Act (ITFA) by imposing a discriminatory tax on internet-based commerce and would likely be challenged in court. Similar taxes enacted in other states are currently facing ongoing litigation. If a digital advertising tax was put into statute and ultimately overturned, it would only increase uncertainty around projected revenues, and Illinois could be forced to refund collected revenues plus interest, potentially worsening future budget shortfalls.

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