MIXED SIGNALS: Even as a proposal to tax advertising is routed at the local level, similar measures seem to be gaining favor in the national arena By ALAN PELL CRAWFOR

Ever since Marion Barry got out of stir, the

Those in Ward 8 elected him to represent them in City Council, which is where he could be found on a drizzly Thursday in early March. Mayor Sharon Pratt Kelly’s chief financial officer had just started to defend Kelly’s proposed 6% advertising tax when Barry spoke up.
‘I’ll tell you right now, I’m opposed to this tax,’ Barry announced. ‘It appears to be anti-business, and it appears to be unenforceable.’ Heads turned when he said it. Jaws dropped in amazement.
‘That’s a shock,’ somebody whispered. ‘Barry doesn’t have any advertisers in his ward.’
‘How do you account for it?’ asked another observer.
‘Beats me,’ the wise guy said with a smirk. ‘Somebody must’ve bought him off.’
It was all downhill from there for the proposal. Every council member who spoke up on the tax opposed it, and the Mayor’s representative was answering questions about it – most of them hostile – all afternoon. Opponents of the scheme were there to testify against it well into the night.
By the time the sun rose over the beaux arts pile where the council convenes, the ad tax was dead. Whatever support it might have enjoyed had disappeared, and all sentient beings around the District Building seemed to agree with Jack Evans, one of Barry’s Council colleagues, who predicted disaster if the measure passed. ‘The first year we get a lot of money,’ Evans warned, ‘and the second year everybody leaves and we get no money.’
That, or something close to it, is what happened when Florida passed a similar ad tax five years ago. Companies yanked $80 million in TV spots there, offering an example D.C. officials were not allowed to miss. Winston Gardner, a former Sunshine State legislator who sponsored the bill, wrote to Mayor Kelly warning her not to make the same mistake.
‘I’ve fought the wars and was extremely proud of my efforts,’ Gardner explained to Kelly. ‘But ultimately, I came to realize that the people were not well-served by such a concept. The pain is too great, and the benefits are slim.’
The Mayor wasn’t the only politician to get Gardner’s letter. Copies were hand-delivered to every member of the Council and, by all evidence, it was read by each one. ‘They kept citing the Florida experience when they asked questions,’ says Linda Dove, the director of state government affairs for the 4A’s. ‘Gardner’s letter, plus the united front represented by the industry people who testified, really did it for us. Everybody was there – the retailers who buy the ads, the media who run them, and the agencies who create them.’
If the news from the District Building was encouraging for advertisers, that out of the renovated Willard Hotel five days later was decidedly mixed. The American Advertising Federation hosted its Government Affairs Conference in that historic establishment, and the speakers didn’t exactly tell the conferees what they wanted to hear.
Iowa Republican Fred Grandy, late of TV’s Love Boat, warned of a ‘greater appetite’ for the Harkin Amendment to reduce tobacco ad deductibility than ever before. And Senate minority leader Bob Dole opined that taxes on tobacco and alcohol advertising are in the offing.
The real news out of the conference, however, came from South Carolina’s Ernest (Fritz) Hollings. The silver-haired Democrat, chairman of the Senate Finance Committee, said he believes this will be the year for Federal Trade Commission reauthorization. Since 1980, the FTC has operated without congressional authorization because of a longstanding dispute between the House and Senate over whether the agency can ban ads that are not only ‘false’ and ‘deceptive’ but ‘unfair.’
For a while in the Carter years, the FTC tried to enforce this Unfairness Doctrine, which Congress later took away. The House, which wants to restore the power, has refused to reauthorize the agency ever since. That, Hollings predicts, may soon change. ‘This year we can get it done,’ he says.
What makes him think so? ‘Because,’ explains Hollings in his curiously courtly and oblique way, John Dingell, the powerful chairman of the House Energy and Commerce committee, ‘talks more pleasantly about it.’
Hollings hopes he’s right. ‘I don’t like the idea of the bureaucracy telling people what’s fair or unfair,’ he says. ‘If you ask me, I think everything about the last administration was unfair.’
Copyright Adweek L.P. (1993)