March 6, 2003

Legislative Activity

Date: March 6, 2003

To: Topeka Advertising Federation
Advertising Federation of Wichita

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

Re: Ad Tax Legislation in Kansas

On Monday and Tuesday, March 10 and 11, the House Taxation Committee will conduct a hearing on House Bill 2421 which would repeal all sales tax exemptions and extend the sales tax to all services, including advertising time and space.

Last month, Michelle Stubblefield, president of the Topeka Advertising Federation, testified before the committee in opposition to a bill which would have eliminated the exemption for advertising production services. It is very important that committee members hear from the industry that a tax on advertising is a bad tax.

I have listed below arguments to use against the bills. I have also included a list of the committee members and e-mail addresses. All legislators can be contacted by calling (785) 296-0111. The legislature's Web site is located at www.kslegislature.org.

Please let us know of any responses you receive. Do not hesitate to call me at 1-800-999-2231, if you have any questions.

Advertising taxes 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 Kansas 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.

House Taxation Committee

Chairman: John Edmonds (R), Great Bend, e-mail: edmonds@house.state.ks.us
Vice-Chair: David Huff (R), 10458 Caenen Lake Rd., Lenexa, e-mail: huff@house.state.ks.us
Steve Brunk (R), 4430 Janesville St., Wichita, e-mail: brunk@house.state.ks.us
John Faber (R), Brewster, e-mail faber@house.state.ks.us
Jeff Goering (R), 1829 Smarsh Ave., Wichita, e-mail: goering@house.state.ks.us
Mario Goico (R), 1254 N. Pine Grove Ct., Wichita, e-mail: goico@house.state.ks.us
Lana Gordon (R), 5820 SW 27th, Topeka, e-mail: gordon@house.state.ks.us
Terrie Huntington (R), 3216 W. 68th, Mission Hills, e-mail: huntington@house.state.ks.us
Jeff Jack, Parsons (R), e-mail: jack@house.state.ks.us
Ed O'Malley (R), 4804 W. 57th St., Roeland Park, e-mail: omalley@house.state.ks.us
Tim Owens (R), 7804 W 100th St., Overland Park, e-mail: owens@house.state.ks.us
Ted Powers (R), Mulvane, e-mail: powers@house.state.ks.us
Scott Schwab (R), 14953 W. 140th Ter., Olathe, e-mail: schwab@house.state.ks.us
Arlen Siegfreid (R), 1403 W. Prairie Ter., Olathe, e-mail: siegfreid@house.state.ks.us
Lee Tafanelli (R), Ozawkie, e-mail: tafanelli@house.state.ks.us

Ranking Democrat: Bruce Larkin, Baileyville, e-mail: larkin@house.state.ks.us
Paul Davis (D), 1527 Massachusetts, Lawrence, e-mail: davis@house.state.ks.us
Vaughn Flora (D), 431 SE Woodland, Topeka, e-mail: flora@house.state.ks.us
Ruby Gilbert (D), 2629 N. Erie, Wichita, e-mail: gilbert@house.state.ks.us
Nancy Kirk (D), 932 SW Frazier, Topeka, e-mail: kirk@house.state.ks.us
Jim Miller (D), Coffeyville, e-mail: millerj@house.state.ks.us
Tom Sawyer (D), 1041 S. Elizabeth, Wichita, e-mail: sawyer@house.state.ks.us
Bonnie Sharp (D), 4218 Dixie Ct., Kansas City, e-mail: sharp@house.state.ks.us