Taxing newspapers is wrong

Monday, February 21, 2005

The relationship between government and taxes is very much like the bond between an addict and their drug of choice. When one "revenue stream" (tax to you) is no longer considered acceptable, a new victim must be found.

This year, the Iowa Legislature is looking for new sources of revenue to fund a wide variety of initiatives from the Values Fund to new incentives to keeping young people in Iowa.

A "trial balloon" that we have caught wind of -- taxing advertising, newspaper circulation and newsprint -- is simply a bad idea. Not only has similar legislation failed in other states, but taxes on the raw materials of our trade will send a negative ripple throughout the Iowa economy.

Arizona, Iowa and Florida each passed a tax on advertising… and repealed the taxes because they hurt their respective economies and were impossible to administer. During Florida's six-month ad tax experiment, its department of revenue processed 12 million magazine advertising transactions, the administrative cost of which exceeded the tax collections. Since 1987 (when the Florida services tax was repealed), advertising taxes have been considered in 39 states and rejected in each case.

A tax on circulation or newspaper subscriptions is a bad idea whose time should never come. Such a tax would essentially be a levy on the free flow of information in our society, and is therefore contrary to the public interest.

To require newspapers to pay a tax for distribution of their product would also be discriminatory since radio, television, direct mail and free newspapers would not be subject to the tax.

In 1990, the Iowa Supreme Court ruled an exemption in Iowa was justified. Among other reasons, the court said the newspaper exemption is justified since local newspapers were the only source for detailed local news and those newspapers served the citizenry by providing information and enhancing the literacy of the population

Thirty-six states currently exempt circulation from sales taxes. Iowa should remain among them.

A tax on newsprint would have a similar negative impact on local and state economies. Without a progressive newspaper, there can be no effective economic development in a community or region. Adding yet another tax burden on newspapers, many of whom are struggling to cope with the economic problems of rural Iowa, would truly be a case of the state shooting its best economic development partner in the foot.

Please tell your area legislators that no attempt should be made to balance the state budget by making it more expensive for taxpayers to have access to the critical information that is published in your newspaper.