The Association of National Advertisers is asking Gov. Mark Dayton and legislators to drop a proposal to tax advertising services.
As part of his overall budget, Dayton wants to expand the sales tax to include some services, including advertising. With the larger base of taxable items, the overall state sales tax would then drop from 6.875 percent to 5.5 percent. Dayton says this makes the tax fairer and more sustainable.
But a growing number of groups who would be affected by the proposed new tax are asking to be exempted.
In a statement, ANA Group Executive Vice President Dan Jaffe said:
“A new tax on advertising services would be extremely harmful to businesses, media and consumers in the State of Minnesota. Particularly with today’s challenging economy, it would be counterproductive to make it substantially more expensive for businesses to communicate efficiently with consumers.”
The Star Tribune’s CEO also has attacked the advertising tax, and the paper has suspended newsroom union contract negotiations while the state tax discussions go on.
The ANA letter to state officials said the proposed advertising tax is economically unsound and would result in double taxation:
“Advertising is not an end product, such as a bar of soap. Rather, advertising is a communications process, which helps produce the sale of the bar of soap, which is already subject to the state sales tax. Since a portion of any tax on the intermediate advertising process is likely to be passed along to consumers, there would be at least double taxation for most products or services purchased in the state.”