US: Washington state ushers in tax breaks for newspapers

Posted by Liz Webber on July 3, 2009 at 3:05 PM

This week, a tax break for newspapers in Washington state went into effect, giving print publications a 40 percent reduction in the state business tax. One lawmaker stressed the tax cut was "not a bailout." It is interesting to note Washington already offered equal exemptions to the aerospace and timber industries, both of which are critical to the state's economy.

In a year which saw the Seattle Post-Intelligencer make the move to online-only and the Seattle Times cut 500 staff members, many publications will welcome any relief they can get. However, others wonder whether the measure will be enough to revive struggling papers and what such aid means for the publications' journalistic independence.

The new law ultimately will cost Washington $1.3 million in tax revenue at a time when many state governments are scrambling to overcome budget deficits. On the other hand, newspapers like the News Tribune of Tacoma - whose savings totals $100,000 - will be able to provide salaries for two reporters; the paper will still pay $150,000 in other taxes.

Tax breaks for newspapers are not common in the US, but they are not unheard of. Michigan introduced a bill in May concerning the issue, though it has yet to reach debate. Some states, like Idaho, Mississippi, and Colorado, offer papers exemption from the state sales tax. Indirect federal subsidies also exist in the form of reductions on postal service rates.

Unlike the offers of some European governments, the Obama administration has made it clear there will be no widespread bailout for the nation's newspapers. While recognizing the importance of the press and the problems it faces, White House spokesperson Robert Gibbs commented, "I don't know what, in all honesty, government can do about it."

Nicolas Sarkozy of France has taken the opposite approach, compelling the government to pony up 600 million euros, in addition to the millions of euros in subsidies newspapers already receive. Some worry this dependence on state funds only puts off the inevitable closures of publications because it dissuades publishers from innovating.

Former Scotsman editor Tim Luckhurst has argued Scotland's papers need some form of state assistance - in order to continue covering the Scottish government to an adequate degree. Needless to say, critics of a bailout say this puts newspapers in an awkward position.

In South Korea, the question of a bailout takes on new dimensions when one considers which newspapers require the most help. According to the deputy managing editor of the Korea Times, Sah Dong-seok, it is the left-wing media that are struggling. The right-leaning mainstream media oppose a bailout because they hope to push their liberal competitors out of business.

In the case of Washington state, not all newspapers are suffering to the same degree, but a little extra cash is nothing to sneeze at. Will the tax break create a dependence on government aid? That seems unlikely, yet as with publications in the rest of the country Washington's papers are going to have to come up with some new ideas of their own if they hope to stay in print.

Source: Associated Press, via Editor & Publisher