Latest Proposal Meets Same Opposition From Ad Groups

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WASHINGTON ( -- Having so far avoided the latest legislative move to tax advertising, Connecticut media and advertising leaders met today to plot continuing efforts to defeat a scaled-down version of the same proposal that may yet come to a vote.

The vote on the original measure, which was expected last Friday, did not occur. Instead, legislators came up with another, weaker ad tax proposal, which was the subject of today's gathering at the Hartford Courant. It was unclear today whether the vote would come later this week or would be delayed until next week.

$500 million budget gap
Democratic legislators, seeking

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to fill a $500 million hole in the state budget for the fiscal year than ends June 30, originally proposed to eliminate an exemption in the state sales tax for advertising and charge the 6% state sales tax for ad placement.

Late last week, after protests from advertising and media officials, Senate President Pro Tem Kevin B. Sullivan "clarified" the proposal, saying it was intended to tax "creative services" as some states do, not media placement. That would indicate a tax on advertising agencies and marketers that create advertising in the state, which has a well-populated corridor of marketing consultants in the Greenwich and Westport areas.

An aide to Mr. Sullivan today said the state is hoping to raise $40 million through the proposal.

Already taxes some services
Matthew Clark, president of the Advertising Club of Connecticut and president of Clark Marketing Research Group, however, said the $40 million figure may have represented taxes expected from the original plan. Mr. Clark said because Connecticut already taxes creative services for print and collateral, the proposal's addition of broadcast and Internet work couldn't possibly raise that much money.

Mr. Clark said advertising and media companies are concerned that while legislators have scaled back their plan for this year, passage of any ad tax will prompt legislators to again tax advertising for additional revenue next year.

"This state is in such budgetary crisis that if it passes, we are worried that it could make it easier to expand the tax next year," he said.

Other state proposals
Florida approved a tax on media placement in 1986, only to repeal it a year later after an advertiser boycott. Seven states -- Arkansas, Kansas, Maryland, Michigan, Nebraska, Ohio and South Dakota -- now have such proposals, said Dan Jaffe, executive vice president of the Association of National Advertisers.

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