Virginia Lawmakers to Vote on Ad Tax

ATLANTA The Virginia General Assembly on Friday will vote on a measure calling for the removal of tax exemptions on the purchase of advertising time and space.

Under current law, advertising is exempt from the 4 percent sales tax applicable to all purchases. If this proposal goes into law, however, all businesses that buy advertising will be required to pay 4.5 percent sales tax, effective July 1.

The Assembly will likely vote on the measure tomorrow, and the Senate will be asked to vote on the package as soon as Sunday.

This is only the second time that such a tax proposal has been made, according to Linda Dove, senior vice president of state relations at the American Association of Advertising Agencies in Washington, D.C. She noted that in 1987 Florida passed a similar tax proposal that was repealed within six months.

“This kind of tax is impossible to administer,” Dove said. “It is a complicated process that will hurt not only the advertising industry, but small businesses especially, because if these exemptions are eliminated, people will cut back on advertising.”

The proposal to eliminate media exemptions is part of House Bill 5002, sources said.