Pennsylvania House Passes Ad Tax

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The Association of National Advertisers has sent a letter to the Pennsylvania Senate opposing a new ad tax trying to work its way through the state legislature.

The Pennsylvania Senate Committee on Legislation this week held a hearing on a House bill extending the sales tax to various services, including advertising and PR, according to the Association of National Advertisers.

So what?

Florida passed a similar law in the 1980s, and it resulted in a sizeable drop--ANA says 12%--in broadcast advertising in major Florida media markets.

There was not an early full-court lobbying press against the Florida bill, in part because one of the services that bill included was legal and many believed it would never pass a legislature full of lawyers. It did.

The Pennsylvania bill excludes lawyers and accountants, categories cut from the the legislation before its Dec. 21 passage, according to ANA Senior VP Linda Dove.

But it left in banks and financial services, which will make for tough sledding in the Senate, where several of those institutions registered their disapproval at the hearing Jan. 3. One company, Erie Insurance, threatened to move out of the state entirely.

States are always looking to raise revenue, which is why the sales-services tax crops up regularly, though rarely gaining traction as it did in Florida. The Pennsylvania legislature is unlikley to pass a tax on big banks and insurance companies either, but legislators may have needed to propose it to show they were trying to leave no stone unturned in their search for loose change, and then draw enough widespread opposition to it to cover their retreat from the bill.

There could also be some media payback involved. Legislators voted themselves a pay-and-benefits raise in the wee hours of the morning before adjourning for the summer in July, according to the Pittsburgh Post-Gazette, a move that drew fire from columnists and commentators across the state, according to CNN at the time.