States Consider Taxes on Advertising

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By: Lucia Moses

Several cash-strapped state governments are looking at taxing advertising to raise money, which has newspaper lobbyists scrambling to mount effective opposition. The lobbyists have beaten back ad-tax proposals in Connecticut and South Dakota, but the issue still lives in at least three other states: Arkansas, Michigan, and Nebraska.

“We’re taking it seriously, and we’re going to fight it with all our might,” vowed Dennis Schick, executive director of the Arkansas Press Association, part of a coalition fighting a bill to remove an ad-sales-tax exemption enjoyed by newspapers and other media.

A proposal in Nebraska could heap as many as five taxes on a single ad, a crushing load for small advertisers, said Allen Beerman, executive director of the Nebraska Press Association. “The only way goods or services are moved is through advertising,” Beerman said. “Why would you have a recovery tax? And that’s exactly what it is. It makes no economic sense.”

Newspaper execs hope to convince lawmakers that, in addition to hurting advertisers and the businesses they support, an ad tax would be a revenue loser.

Exhibit A is Florida, which in 1987 restored a media-tax exemption less than a year after repealing it. “It was almost impossible to administrate,” recalled Dick Shelton, lobbyist for the Florida Press Association.

Other tax issues also have newspapers concerned. Kansas is reviewing all its tax exemptions, among them a manufacturing exemption that, if removed, could raise the cost of materials such as newsprint and ink, said Jeff Burkhead, executive director of the Kansas Press Association. A similar measure was killed recently in North Dakota, where sales-tax exemptions for paper and ink were preserved.

And politicians in Ohio are threatening to jettison the state’s exemption on newspaper-circulation sales, said Mike Gaither, president of the Ohio Circulation Managers Association. Gaither calculated that such a move would cost his own newspaper, The Blade in Toledo, “a quarter-million dollars annually from the get-go.”

Proposals like these surface every now and then, but lobbyists worry that the financial motivation is stronger this time around. “They’re more desperate than ever for money, like every state is,” said Schick in Arkansas, “so they might be more likely to remove exemptions than in the past.”

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