January 28, 2002

Legislative Activity

Date: January 28, 2002

To: AAF Members

From: Clark Rector, Jr., Vice President-State Government Affairs

Re:Oklahoma Advertising and Services Tax Threat

As you are aware, Governor Frank Keating (R) has proposed a comprehensive tax reform proposal which would extend the state sales tax to many currently exempt services. Under the plan advertising agency and production services would be taxed. Time and space purchases would remain exempt.

Any proposal backed by the Governor is a threat that must be taken seriously. It is very important that members of the Oklahoma City Advertising Club and Tulsa Advertising Federation contact your legislators and tell them you are opposed to a tax on advertising services.

The Governor’s plan should be opposed because:

  • Oklahoma advertising agencies will be put at a competitive disadvantage. Advertising is an extremely portable service. Clients can easily take their business to agencies in Texas, 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 Oklahoma 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.

Links to legislators email can be found on the Oklahoma Legislature homepage at www.lsb.state.ok.us. Or you can call the Oklahoma Senate at (405) 524-0126 and the House at (405) 521-2711.

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