Kentucky Ad Tax 

Frankfort, KY, March 1, 2022
—AAF Kentucky Leaders: As you may have seen, State RepresentativeJason Petrie (R-Elkton) Chair of the House Appropriations and Revenue Committee introduced HB 8, which would expand Kentucky’s 6% gross receipts sales and use tax base to 39 new services, including advertising and graphic design services.

The Appropriations and Revenue Committee may vote on the measure as soon as this week and the bill appears to be moving swiftly. I have been in touch with the Kentucky Broadcasters Association and Kentucky Press Association to share intelligence and coordinate our response.

I urge you and members of your ad club to contact lawmakers and let them know that they should oppose any effort to place a tax on advertising services.

  • 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 primary and sometimes sole source of revenue for the media. A reduction in advertising would inevitably result in a loss of jobs and a decreased ability to provide quality content and programming.
  • 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 tax revenue for Kentucky.
  • Consumers will suffer. Advertising is an important source of information. In fact, the U.S. Supreme Court in the landmark Virginia Pharmacy case noted that to many people, the information in advertising is more important than news about current issues.
  • Prices may rise. Studies show that advertising fosters competition and helps lower the price of products and services. Less advertising means less competition.
  • If the legislature included purchases of time and space national advertising dollars will leave Kentucky media. Marketers will move dollars to Indiana, Ohio, Tennessee and other out of state media outlets that reach Kentucky customers.

Kentucky residents can find their legislators here and contact information here.

Please contact lawmakers ASAP and urge them to oppose any tax on advertising—and circulate this alert to other members of your ad club. I will keep you informed as we learn more.

Thank you for your work in defense of advertising. Please let me know if you have any questions or hear back from your representatives.

 Clark Rector

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