Louisiana Governor Proposes Tax on Advertising Agency Services; Update on Ohio and Minnesota

Louisiana Governor Bobby Jindal unveiled his tax reform proposal to members of the legislature yesterday.  That plan calls for eliminating the income tax, increasing the sales tax rate from 4% to 5.88% and extending the sales tax to a number of business services, including advertising agency services.  The Governor’s press release stated that the purchase of advertising time and space (“buys”) would not be taxed.  The legislative session begins on April 8th and there is not yet actual bill language that incorporates the Governor’s tax plan.

We will be working with our member companies and allied industry groups in the state to oppose this new tax on the marketing process.

There are important developments in the two other states where advertising taxes have been proposed, Minnesota and Ohio.  

One week ago, in a speech to a local chamber of commerce group, Minnesota Governor Mark Dayton stated that he was backing away from his proposal to tax most business services.  However, Senate Majority Leader Tom Bakk indicated that the Senate could still consider some expansion of the sales tax base as part of the budget process.  So we continue to closely monitor developments there.

The Ways and Means Committee of the Ohio House heard several days of hearings this week on Governor John Kasich’s budget plan, including the proposal to tax advertising and other business services.  There were a number of industry groups opposing the bill at that hearing.  The focus will now shift to the House Finance and Appropriations Committee, which will hold hearings on the bill next week.  ANA’s letter to the two committees is available here.

We have been working closely with our members and the Ohio broadcasters and have helped develop the Ohio Advertising Tax Coalition.  That coalition has a website and has been holding meetings with member of the two committees.  If your company has not already done so, we urge you to contact members of the Finance and Appropriations Committee to express your opposition to any sales tax on advertising.  It is critical that there is a strong expression of opposition from across the business community.

We have prepared some talking points you may want to use in your contacts with the legislators.

If you have any questions or information about the tax proposals in the states, please contact Keith Scarborough (kscarborough@ana.net) or Dan Jaffe (djaffe@ana.net) in ANA’s Washington, DC office at (202) 296-1883.