Ad Tax Proposal in Connecticut Would Hurt Business

The Association of National Advertisers (ANA) yesterday strongly urged the members of the Connecticut General Assembly to oppose a proposal to extend the state sales tax to cover advertising. The state government is facing budget pressures for the current fiscal year and the new year which begins on July 1st. The Finance, Revenue and Bonding Committee is considering legislation (House Bill 7322) which would increase the sales tax rate and impose the sales tax on advertising services. ANA’s letter stated that taxing advertising would hurt businesses, local media and consumers in the state.

“Taxing advertising is not a new idea, just a bad one,” said Dan Jaffe, Group Executive Vice President of Government Relations for ANA. “Several states passed ad taxes in the 1980’s but each state later repealed them, because it severely hurt their local economy.”

Jaffe stated: “A tax on advertising would hurt all businesses in the state. It would fall particularly heavily on small businesses, many of which engage in cooperative advertising. For many companies, from supermarkets to automobile dealers to franchise restaurants, cooperative advertising is a cornerstone of their marketing efforts. A sales tax on advertising could seriously threaten these cooperative agreements.”

Jaffe concluded: “An advertising tax is economically unsound. Particularly with today’s challenging economy, it would be counterproductive to make it more expensive for companies to communicate with consumers. We hope the members of the General Assembly will reject this approach.”