Municipalities in the major southern California media market are looking for new revenue sources, and they think they have a winner with a tax on outdoor advertising venues. A billboard tax initiative is being put before voters in March 2011.
According to a survey put out by an organization called Sunset Strip, 86% of likely voters were in favor of the Tax Billboard Act in West Hollywood, which is said to mirror a similar initiative in Los Angeles. The remaining 14% said they either were opposed to the tax or had no opinion.
Sunset Strip says the initiative is based on one that was put into place in Philadelphia PA in 2005 and since has survived court challenges from the outdoor industry. The tax is expected to add $4M to the West Hollywood coffers annually, and $24M for Los Angeles.
Explaining its support for the new levy, Sunset Strip wrote, “Tens of millions of dollars in advertising revenues are received each year by billboard companies from billboards, large screen video displays, tall walls, supergraphics and other off-site signs. Yet, under current law, the billboard companies pay virtually no taxes to West Hollywood for the privilege of being allowed to advertise in the city.”
The issue is coming to a head, as proponents of the tax in West Hollywood fear that the city council is taking the side of the outdoor companies and will take steps to prevent an open vote on the topic. Sunset is leading the battle to keep the matter on the ballot.
RBR-TVBR observation: The problem with a tax on advertising is that it is a tax on everything. All types of businesses advertise, so if an ad tax is forced onto all advertising bills, expenses for all types of businesses go up, so prices go up, and ultimately, the advertising tax becomes a tax on consumers.