Texas House Rejects Ad Tax for Now

DALLAS A proposal to raise money for Texas’ school system by placing a 5-8 percent tax on advertising services and media did not pass the Texas House of Representatives but will likely be discussed at a special session later this year.

The House voted Friday not to concur with changes the Senate made to the public-school finance bill, one of which proposed a tax on numerous services, including advertising.

House speaker Tom Craddick said it was “unacceptable to our membership” that, given the late stage of the bill, only five House representatives would have the opportunity to consider “vital” legislation that would affect all House districts.

The House said it would consider the bill later in its session, but since the term ends June 2, ad-industry representatives expect it to be debated in a special session called by Gov. Rick Perry.

“The governor and Craddick have had the position that this whole thing needs to be considered in a special session where they can have extensive hearings,” said Jim Goodnight, vp of legislation for the Dallas Advertising League and executive-in-residence for the SMU Temerlin Advertising Institute in Dallas. “They haven’t rejected an ad tax; they just want to look at it more carefully.”

Goodnight said the bill is “far from dead” and urged the ad industry to ask legislators to vote against the bill.

“The ad-industry stance has always been that we are willing and able and want to pay our fair share of taxes,” he said. “If they want to tax ad agencies with a corporate-profit tax, that probably is the most fair way to do it, but putting a sales tax on ad sales, space and services will reduce demand, cost jobs and ultimately reduce sales-tax revenue.”

The measure, introduced by Senate leader and Texas Lt. Gov. David Dewhurst, passed unanimously in the Senate May 5.

–With Wendy Melillo