Two States Consider Ad Tax

The governors of Minnesota and Ohio are considering legislation that would place a tax on advertisements.

February 27, 2013

CINCINNATI - The governors of Minnesota and Ohio are floating the idea of taxing advertisements to bring in needed cash, Advertising Age reports. Under Ohio Gov. John Kasich??s budget, billboard, print, radio and television ad sales would have a 5% sales tax.

"The whole purpose of advertising is to generate sales," said Dan Jaffe, executive vice president of government relations for the Association of National Advertisers. "So if you're becoming more reliant on sales taxes, you shouldn't be doing anything to stop an effort to sell."

Kasich wants to enlarge the state??s sales tax so he can decrease taxes on businesses and personal income. Ohio has until July 1 to approve the governor??s budget, and the ad tax has bipartisan support.

In Minnesota, Gov. Mark Dayton??s budget would extend the state??s 5.5% sales tax to numerous business-to-business services, which would encompass advertising. "We certainly are going to oppose any tax that has an impact on our clients' marketing abilities," said Steve Arndt, CFO of Campbell Mithun.

Meanwhile, over in Louisiana, Gov. Bobby Jindal has indicated he might put forth a budget with the state sales tax on advertising to nix the corporate taxes and personal income tax.

This isn??t the first time states have attempted to tack on sales tax to ads. Back in 1987, Florida started taxing ads, but repealed the tax when national advertisers yanked conventions and canceled ads in the state.

"If something of this magnitude is taking place in the states, they certainly would be aware of it in Washington," said Jaffe. "We're keeping ourselves on high alert."

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