Debt-plagued Illinois is desperate for new revenue.
One proposal being considered by the administration of Gov. Bruce Rauner is a new tax on services, including advertising. The initial proposed rate was 10 percent; the idea now is to trim that to 6.25 percent, the same as the state sales tax.
Our counterproposal: Don’t impose a tax on advertising at all. Period.
Our position might appear entirely self-serving. After all, as a media company, we receive advertising revenue in exchange for communicating advertisers’ messages to our print and digital readers.
That revenue, along with circulation and other services, makes it possible to finance our journalistic work to keep the community informed.
We believe that function has tremendous value to those we serve.
American leaders from the Founding Fathers on down have had similar beliefs.
The First Amendment to the U.S. Constitution prohibits Congress from “abridging the freedom of speech, or of the press.” Founding Fathers believed so much in the importance of a free, unfettered press they enshrined it in the Constitution.
And a tax on advertising would have an overall greater impact on businesses besides the news media.
Gov. Rauner and the Legislature only have to look at what happened when Florida imposed a tax on advertising.
The results were unsuccessful, to say the least.
After the tax was imposed, advertising purchases overall – newspapers, radio, television, cable TV, billboards, online – decreased by 12 percent, according to statistics provided by the Illinois Press Association.
Advertising revenue declined by $100 million.
Florida lost 50,000 jobs and $2.5 billion in personal income because of lost advertising revenue.
And, perhaps the most damning result: The costs incurred by the state of Florida to administer the new advertising tax exceeded tax revenue.
In other words, it cost more money to collect the tax than the tax generated.
Only the most committed big-government bureaucrat would think that was a good idea.
Florida’s leaders quickly realized their mistake. The advertising tax was repealed six months later.
Illinois has an advertising industry that helps produce more than 900,000 jobs and $267 billion (17.3 percent) of Illinois’ economic activity.
Through advertising, economic activity is stimulated in all sectors of the economy.
Individuals advertise their garage sales and various items for sale.
Churches advertise their service times and locations.
Small businesses advertise their goods and services.
Larger businesses (such as automobile dealers, Realtors and grocers) do the same.
A government-induced slowdown in advertising, which the proposed tax would almost certainly cause, would ripple through the state’s economy to the detriment of all.
No other state has a tax on advertising.
Illinois should learn well from Florida’s experience.
Don’t impose an advertising tax.