By Dennis Hetzel, Executive Director

Dennis Hetzel

Every Ohio Newspaper Association member likely will have negative consequences, possibly severe ones, if the Kasich Administration’s proposal to charge an advertising sales tax becomes law as written.

We are continuing to process information.  The actual budget bill has not been released yet, and the devil is in the details. But the information we have so far is extremely troubling.

In essence, Ohio would be one of the few states to levy this tax as part of a broad effort to tax services. While this may make some conceptual sense, an advertising tax will damage our industry and our economy, and it is an administrative and book-keeping nightmare that has not worked in at least three other states. Florida had to rescind its tax only a few months after it began.

The administration also talks about this as a 5 percent sales tax. They want to reduce the overall state rate of 5.5 percent to 5 percent. However, because Ohio appears to lead the nation in the amount and complexity of local taxes, the actual burden will be 6 percent or more in most places when local sales taxes are added.  Our advertisers in many cases simply will spend 6 percent less, or newspapers will have to pass on this added cost and hope it sticks.

It gets worse. The proposal exempts national advertising sold by radio and television and does not appear to tax Internet advertising.  Consider the impact on local merchants.  For example, the local hardware store would have to pay sales on television advertising but Lowe’s and Home Depot’s would not. It will be one more excuse for ad agencies – which also will be levying sales taxes, by the way, and might leave the state – to avoid complexity and shift dollars from print.

In fairness, I should add that Kasich’s overall proposal also includes significant income tax reductions over three years. The tax break for certain types of small businesses also could benefit some ONA members who are structured so that income passes through to their personal returns.  And we appreciate that the exemption on taxation of newspaper circulation sales remains. (It is unclear what this proposal means for Internet subscriptions.)

But we cannot sit still for this sales tax proposal.  We will need to lobby aggressively and build coalition partners as the budget works its way through the Legislature, probably for approval sometime in June.

The time to start acting is now, though. Not June.

The immediate way you can help is to reach out to members of the Ohio House of Representatives (click here for a directory by county) and Ohio Senate to tell our story. It is particularly important to contact local members of the House Finance Committee, since they will consider the bill first, and hearings already have begun.

The other way you can help is to come to our convention. The registration deadline is today.  We will have Gov. Kasich and a number of key legislators at our opening night reception on Wednesday.  Please help us make our case and show a big turnout at the reception.

Click here for ONA’s talking points. Feel free to share them with legislators, your local Chamber of Commerce, other groups and your editorial writers.

Click here for a one-page summary of a 2010 study sponsored by the Newspaper Association of America that shows the negative impact of an advertising tax in Ohio.

Click here for the Administration’s full list of all services affected by the sales tax plan.

Here are some links to several of our members’ stories about the governor’s sales tax plan:

P.S. This has been quite a week. Be assured we also will do all we can to keep you informed and address the Postal Service’s announcement this week that it will end Saturday mail delivery in August.  Elsewhere in today’s Bulletin, you will find more information and links.

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