Management Slant
- There is a significant relationship between television advertising intensity and the sales tax rate.
- Increases in the tax rate for low-emission vehicles reduce the intensity of television advertising for these vehicles, whereas decreases in the tax rate increase the television advertising intensity.
- Advertisers’ demand for advertising slots changes when facing external tax-rate changes.
- With companies’ procyclical advertising behavior, sales tax can be a highly effective tool to motivate socially desirable consumption.
Introduction
To incentivize consumers to alter their purchase behaviors, governments often adjust sales tax to discourage (or encourage) consumption of socially undesirable...
