Dear AAF-BR members,
A few weeks ago, the Baton Rouge Business Report asked me to give a statement on behalf of AAF-BR on a proposed tax on the advertising industry. As you may know, THIS WOULD BE ONE OF MANY NEW professional service taxes designed to offset the elimination of the state’s income tax and is expected to be introduced in the upcoming legislative session. We were quick to respond with strong opposition.
The Business Report followed up with a story that earned the attention of advertising professionals across the city. We quickly formed a coalition to prepare a strategy for combatting any attempts at taxing our industry.
AAF-BR’s strong opposition didn’t just get your attention — it got the attention of the Louisiana Department of Revenue, which responded by exempting media buys from the proposed sales tax. A victory for the advertising industry, but we’ve still got a lot of work to do. Advertising services are still on the table to be taxed at 5.88%.
In addition to our coalition efforts, AAF-BR board member Becky Sadler and I met with Secretary Tim Barfield of the Louisiana Department of Revenue to discuss the ramifications of this tax. I’ve also participated on the Jim Engster Radio Show, and Advertising Age magazine covered AAF-BR and our efforts in fighting this tax.
I am a Baton Rouge native and proud to call this state home. A tax such as this could dramatically affect agencies, freelancers, photographers and every other discipline associated with this industry we love so dearly in Louisiana. I ask you to join me in fighting this harmful tax. We are far stronger together, as a united organization. This is your membership dollars hard at work! Your membership dollars are what keeps this club strong. The reason for our opposition to this tax is detailed below, I ask that you share it with as many people as possible.
We are still in the discovery phase and working closely with the national AAF club on defense strategies once this bill is introduced. As we continue to monitor this tax, I ask that you review the talking points below so you are well equipped to discuss this matter as needed. I will keep you informed of any developments as I receive them along with specific actions to act.
AAF-BR strongly and collectively oppose this potential tax on advertising for the following reasons:
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Advertising expenditures account for $91.2 billion in economic output in Louisiana – that is 14% of the $649.1 billion in total economic output in the nation.
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Advertising-driven sales of products and services help support 271,644 jobs, or 14% of the 1.9 million jobs in Louisiana.
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Placing a tax on advertising services increases the cost of advertising. Most clients operate on a fixed advertising budget, so 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.
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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.
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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.
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Prices may rise. Studies show that advertising fosters competition and helps lower the price of products and services. Less advertising means less competition.
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National advertising dollars will leave the state. Marketers will move to markets where they can reach the most consumers with the fewest dollars.
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Border markets will suffer. Markets close to the state line will lose money to untaxed media across the border.
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Small agencies WILL lose business across state lines and/or face a reduction in client budgets equal to the tax imposed.
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Inhouse work by clients is exempt. Thus, creative work, pasteups and other services can be lost by agencies.
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It WILL BE harder for agencies to compete with out-of-state agencies due to a 5.88% premium of doing business in Louisiana.
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In 1987, Florida enacted an advertising and services tax that was repealed after only six months because OF THE NEGATIVE IMPACT IT CREATED.
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Advertising dollars will leave the state. While the Florida ad tax was in effect — all of six months — national advertising purchases increased 3%. In Florida, they decreased 12%.
Thank you in advance for your voice and your help in defeating this harmful tax.
Hunter Territo
AAF-BR President