Update on State Ad Tax Developments

Iowa:  A proposal to tax advertising in Iowa appears to be dead.  A subcommittee of the House State Government Committee met Monday morning to consider House Study Bill 105.  That bill would impose a one per-cent tax on all political advertising to help fund a campaign finance reform regime.  At an earlier subcommittee meeting there was some discussion about extending the tax to all commercial advertising as well as political ads.  On Monday, the subcommittee removed the advertising tax provision from the bill.  We will continue to work with the Iowa broadcasters and other industry groups in the state to monitor developments on this proposal.

MarylandLegislation has been introduced in the Maryland House of Delegates that would impose the sales tax on a number of business services including direct mail advertising, public relations, business consulting and commercial photographic services.  House Bill 448 has been referred to the Ways and Means Committee, which will hold a hearing on the proposal on March 14th.

ANA is working closely with other industry groups to oppose this bill.  Local groups believe it is unlikely that House Bill 448 will move this year -- there is no Senate companion bill and Governor O'Malley has stated that he will not support any new taxes this year.  However, the bill may be the opening salvo in a more serious effort to extend the sales tax to new business services in the 2008 legislative session.

It would be helpful if you contacted members of the Ways and Means Committee to express your opposition to any tax on direct mail and other advertising services.  The text of House Bill 448 can also be found on the House of Delegates' website. 

Michigan:  We met with the President of the Michigan Association of Broadcasters this week to discuss the tax situation there.  Last month, Governor Jennifer Granholm proposed a new 2% tax on many business services, including advertising agency fees.  Under the Governor's plan, the 2% tax would not apply to the purchase of advertising time or space.  So far, the Governor has been unable to find a member of the Michigan Legislature to formally introduce her plan as a bill.  We are continuing to work closely with the broadcasters and other industry groups in the state to monitor the situation there.    

If you have questions or need more information about these or other state ad tax threats across the country, please contact Keith Scarborough, Senior Vice President for Government Relations in ANA's Washington, DC office at kscarborough@ana.net or (202) 296-1883.

If someone else in your company is responsible for state tax issues, please pass this along and provide us their contact information for future communications.