House bill to tax ads


Susan Smith, Communtiy News Service Editor

PIERRE (CNS) – One state lawmaker wants to tax media advertising and has filed a bill to that effect.

Rep. Burt Elliott, D-Aberdeen, is sponsoring legislation that puts a 4 percent sales and use tax on the gross receipts from media advertising. Public notice advertising would be exempt under the proposed bill.

He expects a fair amount of opposition to the proposal.

“It’s not going to be very popular,” he said. “I think the only people that are going to be for it are those that realize there’s an inequity.”

Far more people buy advertising than smoke cigarettes or drink alcohol, but both those substances are taxed, Elliott said. Taxes on both face an increase this year as part of Gov. Mike Rounds’ proposal to balance the state budget.

“There’s a lot of people that pay for advertising,” Elliott said. “I think it’s a fairness issue.”

His bill was filed with the Legislative Research Council on Jan. 29. He didn’t ask for any support from lawmakers or co-sponsors to the bill, but some Republicans and Democrats signed on anyway.

“I know it’s going to be attacked on freedom of speech and that’s a bogus argument,” Elliott said.

The same people that collect the sales tax on the printing of advertising inserts, don’t collect it on placing them in newspapers, Elliott said. They say it’s a freedom of speech issue.

“South Dakota doesn’t tax advertising because South Dakota has understood what sort of detriment that would be to our economy,” Dave Bordewyk, lobbyist for the South Dakota Newspaper Association said.”

The bill could hurt the economy because South Dakota businesses need to advertise in order to sell their products and services, Bordewyk said. The additional tax on advertising could cause them to stop advertising, which would hurt sales – or they might pass the 4 percent tax onto consumers who then have to pay higher prices for the goods and services.

A couple of states have a gross receipts business tax that advertising sometimes gets wrapped up in, Bordewyk said. Two states also have taxed advertising directly, Florida being one of them. Those taxes have since been repealed.