May 29, 2001

Legislative Activity

Date: May 29, 2001

To: AAF Tennessee Advertising Federations

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

Re: Tennessee Taxes

As you know, Tennessee legislators continue to search for solutions to the state's budget crisis. A conference committee has begun deliberations on a number of tax options to raise revenue to cover the budget shortfall. Although no consensus for any plan has emerged, extending the sales tax to services, including advertising, remains a serious option.

It is imperative that you, and other members of your advertising federation, contact members of the conference committee (listed below) and urge them not to pass an advertising and services tax. The tax should be rejected for the following reasons:

  • Placing a tax on advertising services and/or placement increases the cost of advertising. Because most clients operate on a fixed advertising budget, 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.
  • Advertising is the primary source of revenue for the print media and the sole source for broadcasters. A reduction in advertising would inevitably result in a loss of jobs and a decreased ability to provide quality content and programming.
  • 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.
  • 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.
  • Prices may rise. Studies show that advertising fosters competition and helps lower the price of products and services. Less advertising means less competition.
  • National advertising dollars will leave the state. Marketers will move to markets where they can reach the most consumers with the fewest dollars.
  • Border markets will suffer. Media in markets close to the state line will lose money to untaxed media across the border.

Do not hesitate to contact me at 1-800-999-2231 or if you have any questions.

Senate conferees
Douglas Henry, D-Nashville, (615) 741-3291;

Jim Kyle, D-Memphis, (615) 741-4167;

Bob Rochelle, D-Lebanon, (615) 741-4109;

Ben Atchley, R-Knoxville, (615) 741-3791;

Tim Burchett, R-Knoxville, (615) 741-1766;

Bill Clabough, R-Maryville, (615) 741-2427;

Ward Crutchfield, D-Chattanooga, (615) 741-6682;

Gene Elsea, R-Spring City, (615) 741-2525;

John Ford, D-Memphis, (615) 741-3304;

Joe Haynes, D-Goodlettsville, (615) 741-6679;

Micheal Williams, R-Maynardville, (615) 741-2061;

Jerry Cooper, D-Morrison, (615) 741-6694;

Jo Ann Graves, D-Gallatin, (615) 741-1654;

Tommy Haun, R-Greeneville, (615) 741-3851;

Roy Herron, D-Dresden, (615) 741-4576;

House conferees
Matt Kisber, D-Jackson, (615) 741-4156;

Tommy Head, D-Clarksville, (615) 741-4441;

Joe Armstrong, D-Knoxville, (615) 741-0768;

Ralph Cole, R-Elizabethton, (615) 741-5725;

Ronnie Cole, D-Dyersburg, (615) 741-6241;

Tim Garrett, D-Goodlettsville, (615) 741-6811;

Joe Kent, R-Memphis, (615) 741-6813;

Shelby Rhinehart, D-Spencer, (615) 741-3879;

Randy Rinks, D-Savannah, (615) 741-2007;

Zane Whitson, R-Unicoi, (615) 741-6800;

Gene Davidson, D-Adams, (615) 741-3979;

Steve McDaniel, R-Parkers Crossroads, (615) 741-0750;

Jim Boyer, R-Corryton, (615) 741-5046;

Stancil Ford, R-Talbott, (615) 741-2202;

Speaker Pro Tem Lois DeBerry, D-Memphis, (615) 741-3830;