March 26, 2002

Legislative Activity

Date: March 26, 2002

To: AAF California Members

From: Clark Rector- VP State Government Affairs

Re: Nebraska Advertising and Services Tax Threat

The full Nebraska legislature could vote as soon as tomorrow on an advertising and services tax amendment offered by State Senator Kermit Brashear (I-Douglass). The legislature is looking to fund a budget shortfall of approximately $180 million. The other proposals under consideration are a 1/2 cent increase in the sales tax and a 1/2 percent increases in the state income tax.

It is urgent that members of the Nebraska advertising industry contact state legislators and let them know that you are opposed to a tax on advertising.

The bill should be opposed because

  • Nebraska advertising agencies will be put at a competitive disadvantage. Advertising is an extremely portable service. Clients can easily take their business to agencies in Iowa, Colorado, Kansas or any other state that does not have a surcharge on agency services.
  • Local businesses will suffer. The clients least able to use out of state agencies will be small, locally owned businesses, which will find it that much harder to compete with larger companies.
  • Placing a tax on advertising services increases the cost of advertising. Because most clients operate on a fixed advertising budget, those using Nebraska agencies will compensate for the tax by decreasing their advertising purchases. This will have a direct — and negative — impact on their business, the advertising industry, economy, consumers and the state.
  • 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.

One of the easiest ways to contact lawmakers is through the legislature’s Web site at

Please do hesitate to call me at 1-800-999-2231, if you have any questions.