January 9, 2006

Legislative Activity

January 9, 2006

The Honorable Catherine Baker Knoll
Lieutenant Governor
200 Main Capitol Building
Harrisburg, PA 17120-0002

Dear Lieutenant Governor Knoll:

On behalf of the undersigned Pennsylvania advertising federations, we urge you to oppose Senate Bill 854 or any other legislation that would extend the sales tax to advertising among other changes.

Our organizations collectively represent approximately 1,000 professionals from all aspects of the advertising industry, clients, agencies, media and suppliers. A tax on advertising would harm not only businesses in our industry, but the Pennsylvania economy and consumers as well.

A tax on advertising will put Pennsylvania businesses at a competitive disadvantage with those from other states. Pennsylvania advertising agencies are among the best in the world and compete with agencies from across the country. An advertising tax will serve as a de facto surcharge on work by in-state agencies and would force many clients to take their accounts to agencies outside Pennsylvania.

Many of those advertising dollars will go to New York, New Jersey, Ohio, Maryland and West Virginia. Significant numbers of Pennsylvanians can be reached through advertising on untaxed media in these border states.

A tax on advertising will bring in less revenue than anticipated. All those advertising purchased moved outside the state discussed earlier will result in fewer taxable transactions. Advertising is a driver of our economy. Less advertising can be expected to be followed by fewer consumer purchases, which means a decrease in sales tax revenue of taxable goods.

An advertising tax is expensive and virtually impossible to administer. In the six months before Florida wisely repealed its 1987 ad tax, the Department of Revenue spent millions of dollars hiring over 200 auditors and writing hundreds of pages of regulations in a futile attempt to find a way to fairly administer the tax. The Department's executive director later admitted, "it was not enough."

We urge you to do the right thing for Pennsylvania consumers and businesses and reject any attempt to place a tax on advertising.

Diana Bald
Philadelphia Advertising Club
1700 Market Street, Suite 1550
Philadelphia, PA 19103

Brian Bronaugh
Pittsburgh Advertising Federation
The Crane Building
40 24th Street
Pittsburgh, PA 15222

Jay Kach
Greater Lehigh Valley Advertising Club
Klunk & Millan Advertising
1431 Chew Street
Allentown, PA 18102

Jane LeVan
Advertising Club of Central Pennsylvania
Fathom Design Group
308 N Second Street
Harrisburg, PA 17101

Tom New
Erie Advertising Club
WQLN Public Broadcasting of Northwest PA
8425 Peach Street
Erie, PA 16509

Paula Rochon Mackarey
Northeast Pennsylvania Advertising Club
Happenings Magazine & Happenings Comm. Group, Inc.
PO Box 61
Clarks Summit, PA 18411