The very idea of taxing newspaper copies has always raised the hackles of the press. The move toward ending the sales tax exemption on Utah newspapers is no exception.
Our state's dailies and weeklies are working hard to head off the possible loss of the sales tax exemption on subscriptions and perhaps on per-copy sales. The press is making its case to a citizen's task force, the State Tax Review Committee, which the Legislature has instructed to look at all exemptions in line with Governor Leavitt's aim of boosting revenue by closing "tax loopholes." Those efforts have ended some exemptions, so that now we pay unaccustomed sales taxes when we buy, say, car washes.Newspapers pay most of the same taxes as other businesses. But it's unconstitutional to levy taxes that limit the spread of knowledge, or punish the press or try to censor it, that are based on the content of the papers or in general are not uniformly applied. Thirty-one states avoid the constitutional questions by giving papers a total exemption from sales taxes, and 12 others provide a partial exemption.
- THE UTAH PRESS is raising the freedom issues as well as arguing that closing the "loopholes" is actually a tax increase that will limit the ability of some people, especially those on fixed incomes, to buy the paper.
The constitutional issue is the most emotional one, having resonated as such all through American history.
The first stamp taxes were imposed in Britain way back in 1704 in the reign of Queen Anne, requiring stamps to be bought and put on various documents and on newspapers. They were called "taxes on knowledge" because they aimed to control a "licentious" press that was getting out of hand after Britain abolished censorship and licensing of printers.
Britain didn't repeal the last of the taxes on newsprint, advertising and newspaper copies until the 1860s. It wasn't until then that enough people could afford papers to make the emergence of a mass press possible. Along with the passage of universal free education, the end of the taxes on knowledge proved a great stimulus to literacy and political consciousness.
In 1765 Britain tried to export the stamp taxes to the colonies, avowedly as a revenue measure to support the British garrison troops. The taxes were among those that sparked the cry of "taxation without representation" and encouraged the colonists to rebel against the mother country, though they were repealed the following year. No American paper ever paid them.
- IGNORANT OR UNMINDFUL of this history, Gov. Huey Long, who ran Louisiana like a personal fiefdom, succeeded in the early '30s in getting his kept legislature to pass a 2 percent gross receipts tax on papers of more than 20,000 circulation - all the big papers in the state, all of which opposed him. That ploy was rejected in the United States Supreme Court in one of the great constitutional decisions that law and journalism students still study closely (Grosjean v. American Press).
A more benign case but one that raised the same constitutional issue arose in 1983 when the Minnesota Star & Tribune successfully fought a use tax on ink and paper that applied only to the larger newspapers (the paper actually paid about half the revenue the state took in from the tax). The U.S. Supreme Court held that the threat of a burdensome tax can "operate as effectively as a censor."
Sharon Sonnenreich, attorney for the Newspaper Agency Corp., says the constitutional issue will be a strong argument when the papers state their case before the committee. She even invokes the axiom, "The power to tax is the power to control."
On the other hand, Janice Keller, who runs the Utah Press Association, thinks the economic case will be the more important in the impact statement the press is preparing.
- BUT IN A NEWSLETTER to her membership, Keller is asking publishers to provide evidence of how the tax would impede a free press. She also is researching how the new tax would affect each paper's operations, whether it will cost the dailies or weeklies some subscribers and how cumbersome the new tax would be. Would the papers need additional staff for all the red tape - "would this become an accounting nightmare where part of your newspaper operation is not taxed and now part would be taxed?" Keller asks.
Keller also says in effect that the tax would be discriminatory because the new information services the papers compete with do not pay sales taxes, including the state-funded computer system UTAH-NET, "which provides instant government information at no charge to the caller."
- TWO YEARS AGO the papers headed off a tax on those advertising inserts that are not clearly a part of the run-of-the-paper product. They argued before the State Tax Commission that it would hurt readers, advertisers and the papers themselves.
By the time this column appears the tax review committee will have heard from its consultants and from the public in a meeting at the Capitol. The papers were ready to argue the economic case, to plead that the end of tax exemptions will amount to a tax increase by an administration pledged to hold the line on taxes, and even to invoke the ghost of Queen Anne.
The media are never more willing to sit on a story than when they are told that releasing information on a kidnapping might harm the victim. That was true in the kidnapping and release of New York tuxedo tycoon Harvey Weinstein last year (Media Monitor, Aug. 23, 1993). It was demonstrated again last week when Tina Susman, an Associated Press reporter, was released by Somalian kidnappers who had held her for ransom 20 days. Throughout her ordeal, AP and all other news organizations kept mum about the kidnapping. The ransom was never paid. News organizations have usually agreed that undue or premature publicity can endanger the life of the abductee, embolden or spook the kidnappers or lead voyeurs and cranks to get in the way of the police.