Proposed tax increase on online newspapers

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Wednesday, February 28, 2018

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Citizens in many states, including Iowa, are not charged sales tax for purchasing a newspaper. We aren’t objective on that point, obviously, but it is sound public policy.

It’s not that government doesn’t need (or at least want) your money. It’s that those governmental entities wisely choose not to wade into choppy political and constitutional waters.

Even the appearance of interference with the public’s access to news and information, which newspapers provide under the protection of the First Amendment, is dicey business. Thus, in Iowa and many states, the purchase of a newspaper, whether by subscription or “single copy” at your favorite convenience store, is not subject to sales tax.

We aren’t claiming this is happening in Iowa, but it is worth noting that, over the years, some politicians have attempted to change tax laws to put the squeeze on newspapers -- especially those unfriendly to their political agendas. Decades ago, Louisiana wrote a tax law in such a way that, of the state’s 124 newspapers, only 13 would have had to pay it. Coincidentally, all but one of those 13 were a pain in the backside of the legendary political kingpin Huey Long.

In 1990, the Iowa Supreme Court upheld the state law granting newspaper readers an exemption from sales tax on their purchases. The exemption is not about ink and paper, it is about the information. It’s information that newspapers proudly deliver to their customers and to their communities.

Since that 1990 ruling, as we all know, the internet arrived. The internet has affected all manner of businesses, including the newspaper industry.

Now, information from newspapers is delivered on multiple platforms. We retain the traditional print product, of course, but many now have a variety of digital offerings featuring up-to-the minute articles, public-service announcements, event livestreaming, photo galleries and video interviews.

But, regardless of how it is delivered, it is still information. It features information that is vital to our communities, citizen engagement and government transparency.

Unfortunately, Iowa lawmakers and Gov. Kim Reynolds are bidding to make a distinction based on how this information is delivered.

Tucked about midway through the Senate’s 130-page tax-reform proposal -- it’s promoted as a tax cut -- is a half-line that calls for a tax increase on newspaper readers who access their information online. Senate Study Bill 3197 calls for taxation of fees citizens pay for digital delivery of “news or information products.” The wording is similar in Gov. Kim Reynolds’ tax proposal.

Iowa wisely exempts each purchaser of a newspaper -- the ink-on-paper version -- from paying sales tax for their information. To tax that information differently because it is delivered differently is bad public policy.

Iowa legislators should tweak the tax bill to retain a consistent approach to the valuable and timely information that newspapers provide.

Brian Cooper is editorial page editor for the Dubuque Telegraph Herald. Find him on Twitter at @briancooper78.