Times Record: Tax relief for all but newspapers (May 16, 2013)

Last Friday, we told you that raising sales taxes on a wide variety of products was a good way to raise revenue in a state that sorely needs it.

A sales tax on newspapers is not one of those products. Before you call us hypocrites, let us explain.

First, know that a sales tax on newspapers is the only new tax in Gov. LePage’s biennial budget. The governor’s well-known anti-tax fervor abates significantly — and only — when the subject is newspapers, whose $154 million in sales in 2010 rivaled that of Maine’s vaunted potato crop.

According to the Maine Press Association, newspapers employed 1,766 Mainers in 2010; paid $71.3 million in wages and benefits; invested nearly $7 million in new buildings, vehicles and equipment; and paid approximately $7.5 million in state and local taxes. The industry also created more than $307 million in affiliated sales per year and supports 3,000 secondary jobs paying an additional $142 million in wages.

Because the governor is such an ardent cheerleader for removing tax burdens from industries, we’re left wondering why he would relish the idea of adding one only for newspapers.

After all, he’s such a staunch advocate of tax relief for business.

It’s certainly the governor’s prerogative if he wants to single out an industry for taxation. It’s happened in the past to cigarettes, booze and tanning salons. Why not newspapers?

The answer is that the dissemination of information is not harmful to society like tanning beds and cigarettes can be. In fact, at the risk of sounding arrogant, newspapers provide an essential service to society, and there is a clear public interest for government to defend a robust, privately owned press, not attack it financially.

Here’s three reasons the government should not tax newspapers: It’s an abridgement on a free press, it puts barriers on the dissemination of information, and it unfairly singles out one medium over others.

The California Legislature realized these problems almost immediately after enacting a tax on newspapers in 1990.

In 1993, magazine publishers successfully argued their subscription sales should be exempt, because the tax placed them at a disadvantage with out-of-state publishers. Magazines soon became exempt. Because weekly newspapers are similar to magazines, they became exempt, too. By 1994, most printed media were exempt.

In sum, the courts ruled government can’t elevate costs for some media and not others, because it can’t escape the appearance that by taxing one and not the other, it is engaging in suppression.

Why hasn’t LePage proposed a new sales tax on TV, radio, junk mail, Internet access or the Yellow Pages — information industries that compete with newspapers?

Why would he roll out a newspaper tax not a week after calling a legislative proposal to increase sales taxes “a bad deal”?

Of course, the writers of this editorial have a huge economic interest in the outcome. But consider the strong public policy reasons the Legislature should spike a tax solely on newspapers.

First, it is essentially a tax on information, not on a product. Ideas should not be taxed.

Second, it looks like an unreasonable government infringement on speech.

Finally, because the LePage administration would have problems convincing a judge it’s not singling out one segment of the communications industry over another, we’re certain it would be erased in court.

For centuries, newspapers have been the best medium for advancing the benefits and responsibilities of citizenship, democracy, literacy and freedom. The Internet has widened the playing field, but it hasn’t diminished the importance of newspapers as a trusted community voice and a durable archive of society.

The LePage proposal to tax the sale of newspapers does not raise a significant sum for state government. But it would capriciously impede an important and well-established flow of information necessary for citizens to become literate, well-informed voters.

But then, maybe that’s the point.

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