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Pa. Lawmakers Debate Ad Tax Measure

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ATLANTA A Pennsylvania Senate committee held five hours of hearings today on a proposal to eliminate tax exemptions on a broad range of services, including advertising, but did not vote on the issue, sources said.

The Committee on Legislation heard testimony from people who work in the industries affected by the proposed change and oppose losing the tax exemption. No further hearings are scheduled before the state legislature returns to session Jan. 23.

The state House of Representatives approved the change Dec. 20 by a narrow 103-92 vote and sent the measure to the Senate. Some observers expected a final vote on the matter by the end of January, but sources said that likely would not happen.

State Rep. Mario Scavello, a Republican, proposed eliminating the exemption to avoid more property tax increases in the state. Eliminating the exemption would, in effect, place a 6 percent tax on services provided by a wide range of professionals including auctioneers, florists, morticians, filmmakers and advertising agencies.

Scavello attended the Senate committee hearings today but was not available to comment, according to his spokesman, Todd Abele.

"This would send an anti-business signal," said Dan Jaffe, evp of government relations at the Association of National Advertisers. "It would also seriously harm the economy in Pennsylvania. This is a tax that will lose them money instead of gain them money."

Pennsylvania Gov. Ed Rendell had asked the legislature to propose ways to provide property tax relief in time for a vote by the end of January. Sources said the legislature most likely would not be able to meet that deadline.

A similar proposal was placed on the ballot in 1989, but voters rejected it by a 2-1 margin.