A group of Idaho legislators recently withdrew a bill proposing to fill revenue gaps left by eliminated property taxes with advertising tax dollars.
The legislation, sponsored by one Democrat and four Republicans, called for an expansion of the state's sales tax (currently at 5%) to include numerous services, including advertising. Lawmakers planned to increase the tax to accommodate a 17% to 27% cut in the state property tax.
AAF Idaho legislative chair Tim Pace and representatives of Idaho-based broadcasters, publishers and retailers met with state lawmakers and explained the advertisng industry's opposition to the proposed ad tax, citing the disastrous Florida experience as a similar failed initiative.
Although sponsors indicated they would exclude ad taxes from rewritten versions of the legislation, they are nevertheless calling for taxes on services such as commercial art and photography, video and film production, copywriting and voice-overs for radio and television announcements.
Mr. Pace, senior VP, Steele, Stoltz & Associates, reports the new bill is not expected to receive serious consideration.
The Wisconsin General Assembly recently voted to eliminate approximately $3 billion in property tax revenues used to fund the state's school system.
Although Wisconsin's Democratic-controlled Assembly did not designate a source of replacement funds, the state's Legislative Fiscal Bureau issued a report estimating that the gap could be filled by expanding the state's 5% sales tax to include currently exempt goods and services. The bureau suggested $73.5 million could be raised by taxing advertising.
AAF Wisconsin legislative chair Mike Brophy, manager-corporate communications for Miller Brewing Co., reports the legislature is unlikely to accept a service tax this year, as the Republican-controlled Senate is not expected to pass the proposal.
Two separate actions threaten tobacco and alcohol advertising in Maryland and the Washington metropolitan area.
Maryland Governor William Donald Schaefer recently signed an executive order banning ads for tobacco and alcoholic beverages from state-operated bus and rail agencies. The ordinance will go into effect by the end of 1994.
Maryland pays subsidies to the District of Columbia's mass transit system. Consequently, Gov. Schaefer's action could potentially ban tobacco and alcohol ads on public transportation in Washington and parts of northern Virginia.
In a similar development, the City Council recently introduced a proposal prohibiting cigarette and alcoholic beverage advertising in publicly visible locations. The ordinance would ban signs, posters, placards, devices and graphic displays for such products. Exceptions would include Metro vehicles and signs adjacent to interstate highways. No action is currently scheduled on this initative.
On March 16, the state Senate's Revenue & Taxation Committee passed a bill eliminating the state's tax deduction for the advertising and promotion of tobacco products by a 5-3 vote.
Originally introduced by Sen. Gary Hart (D., Santa Barbara), the bill will be considered next by the state's Senate Appropriations Committee, although no hearing date has been set.
If the legislation reaches the full Senate, it must pass by a two-thirds vote (as required for all tax bills).
AAF California leaders are directing a letter-writing campaign opposing the bill.