A proposed tax on advertising has ruffled IAR’s feathers

The Illinois Association of Realtors has issued a call to action for members to oppose a proposed 10 percent state sales tax on advertising and related services.

“IAR’s Call for Action urging Illinois legislators to stop a proposed 10 percent state sales tax on advertising and related services is still active and needs your participation,” IAR’s statement reads. “A tax on advertising has proven to slow economic growth. This tax proposal will drive revenue and jobs to neighboring states, hurting an already fragile economy. Studies have shown that a tax on advertising is counterintuitive and flies in the face of the pro-business policies currently being proposed by state leaders. Illinois consumers will ultimately suffer.”

Ending Tax Exemptions for State Finances

Currently being considered by Illinois legislators, the 10-percent tax would expand the state’s sales tax to include advertising and other historically exempt services/industries. Governor Rauner, who made the expansion a focal point of his tax policy while campaigning in 2014, argued the policy would add more than $600 million in revenue.

“Illinois exempts billions of dollars in services,” Rauner’s proposal reads. “More than $600 million in new sales tax revenue can be generated while exempting medical services and many professional services like architects, accountants and engineers, as well as day-to-day items like Laundromats, day care centers, barber shops and animal care.”

Illinois currently taxes 17 services, compared to 24 in Indiana, 94 in Iowa and 76 in Wisconsin. According to IAR, only Florida has passed an advertising tax law, though the 1987 measure was repealed only six months after its passage.

Grassroots Opposition

Rauner’s tax policy was a major point of contention between him and former Governor Pat Quinn, and now that Rauner is pursuing the policy as governor, the issue has galvanized grassroots opposition.

An entire website, in fact, has been created in opposition to the advertising tax plan. In language very similar to IAR’s call to action, NoAdTaxIllinois.com argues that the plan will hurt Illinois’ small businesses.

“Small businesses are the backbone of Illinois’ economy,” the website states. “From the family owned and operated car dealership in Joliet to the real-estate agent in Chicago, small businesses rely on advertising to drive sales. Simply put, less advertising will mean less sales and people will lose their jobs and their businesses.

“A tax on advertising will mean that for every $100 dollars spent on advertising, $10 will now go to the government. A tax on ads is another nail in the coffin of Illinois small businesses.”