May 7, 2003

Legislative Activity

Date: May 7, 2003

To: AAF Arkansas Members

From: Clark Rector, Jr., SVP-state government affairs
Jeff Perlman, EVP-government affairs

Re: Arkansas Ad Tax Threat

Earlier this week, Representative Jim Lendall (D-Mablevale) introduced an ad tax bill (HB 1034) in the House Revenue and Taxation Committee. The measure was soundly defeated, but Representative Lendall is not giving up. We understand he will ask for another vote on the ad tax as earlier as this afternoon or tomorrow.

It is very important that members of the advertising industry contact lawmakers as soon as possible and express strong opposition to any tax on advertising. Talking points and contact information are listed below. Do not hesitate to contact us at 1-800-999-2231 if you have any comments or questions.

An advertising tax should be opposed because:

  • National advertising dollars will leave the state. Marketers will move to markets where they can reach the most consumers with the fewest dollars. Florida taxed advertising for six months in 1987. While that tax was in effect national advertising purchases increased 3%. In Florida they decreased 12%!
  • Advertisers can reach many Arkansas consumers using untaxed out of state media from across the border. During the 1987 Florida tax, Pensacola broadcasters encountered revenue losses of 45%. Most of that money went across the border to competitors in Mobile, Alabama.
  • Local media will suffer huge losses. Advertising is the primary source of revenue for the print media and the sole source for broadcasters. A reduction in advertising would inevitably result in a loss of jobs and a decreased ability to provide quality content and programming.
  • An ad tax is too complex and expensive to administer. The Florida Department of Revenue spent millions of dollars to hire over 200 new auditors in 1987. The executive director admitted afterwards, "It was not enough."

A tax on advertising is bad public policy:

  • Placing a tax on advertising services and/or placement increases the cost of advertising. Because most clients operate on a fixed advertising budget, they will compensate for the tax by decreasing their advertising purchases. This will have a direct -- and negative -- impact on the advertising industry, economy, consumers and the state.
  • Advertising is the engine that fuels the economy. Less advertising means fewer sales. Fewer sales mean reduced revenue and fewer jobs. Fewer sales also result in less sales tax revenue for the state.
  • Prices may rise. Studies show that advertising fosters competition and helps lower the price of products and services. Less advertising means less competition.

E-mail links to most legislators can be found on the Arkansas Legislature homepage at www.arkleg.state.ar.us

Senate: (501) 682-2902
House: (501) 682-6211

House Revenue & Taxation Committee:
Boyd Hickinbotham, chairman, Salem, bhickinbotham@arkleg.state.ar.us
Phillip Jackson, vice chair, Berryville, jacksonp@arkleg.state.ar.us
Kevin Anderson, Rogers, LKAnder@quik.com
Buddy Blair, Fort Smith, blairb@arkleg.state.ar.us
Travis Boyd, Piggott, boydt@arkleg.state.ar.us
David Evans, Searcy, evansl@arkleg.state.ar.us
Danny Ferguson, Forrest City, fergusond@arkleg.state.ar.us
Jeff Gillespie, Danville, jgillespie@arkleg.state.ar.us
David Haak, Texarkana, dhaak@arkleg.state.ar.us
Barbara King, Helena, bking@arkleg.state.ar.us
Dewayne Mack, Kirby, mackd@arkleg.state.ar.us
Jodie Mahony, El Dorado, jmahony@arkleg.state.ar.us
Bob Mathis, Hot Springs, mathisb@arkleg.state.ar.us
Jimmie Milligan, Yellville, jmilligan@arkleg.state.ar.us
Steve Napper, Little Rock, snapper@aristotle.net
Charles Ormand, Morrilton, ormondc@arkleg.state.ar.us
Larry Prater, Cedarville, lprater@arkleg.state.ar.us
Preston Scroggin, Vilonia, scrogginp@arkleg.state.ar.us
Roger Smith, Hot Springs Village, smithr@arkleg.state.ar.us
Bill Stovall, III, Heber Springs, stovallb@arkleg.state.ar.us

Senate Revenue & Taxation Committee:
Tim Wooldridge, Paragould, chairman, twooldridge@arkleg.state.ar.us
Bobby Glover, Carlisle, co-chair, bglover@arkleg.state.ar.us
Jim Hill (Senate president) , Nashville, jhill@arkleg.state.ar.us
Gene Jeffress, Crossett, gjeffress@arkleg.state.ar.us
Paul Miller, Melbourne, pmiller@arkleg.state.ar.us
Terry Smith, Hot Springs, tsmith@arkleg.state.ar.us
Sharon Trusty, Russellville, trustys@arkleg.state.ar.us