IRISH newspapers, despite having the highest VAT rate in Europe, at
12.5 per cent, can hold out little expectation of a reduction in the next Budget.
The Minister for Finance, Mr Quinn, told the general assembly of the European Newspaper Publishers Association (ENPA) that if he reduced the VAT it would have implications for other sectors.
It would also have budgetary implications. A reduction to 5 per cent would cost the Exchequer £13 million a year, he said. However, Mr Quinn agreed to take the request for zero rating of VAT for all European newspapers to his finance minister colleagues as president of the Council of Ministers.
Mr Quinn said he was aware that the Report of the Commission on the Newspaper Industry recommended zero rated VAT. His Department had explained the facts in relation to the issue to the Commission and that it was not permissible to zero rate VAT under EU law.
He said it was unlikely that the European Commission would grant a derogation to Ireland in relation to zero-rate VAT.
The chairman of the British Newspaper Society, Mr David Newell, said there were good social political and cultural reasons for zero-rating news papers. ENPA already had the support of the European Commission, he told Mr Quinn.
The chairman of the National Newspapers of Ireland, Mr Louis O'Neill, said there was a strong case for Ireland moving at least towards the European average of just under 5 per cent. That was within the remit of the Minister for Finance.
He could go to the Council of Ministers seeking a derogation for Ireland as long as Britain had zero-rated VAT on newspapers. "It would take the courage of the Minister to make that proposal, but he does not consider the question of VAT on newspapers a priority."
The president of ENPA Mr Alvin Sold, said the situation in Ireland was "extraordinarily contradictory" in that it had the highest VAT rate in Europe and the highest rate of trans-frontier competition. "We are constantly amazed that this should be allowed to continue." He said that a number of countries had zero rate on newspapers Belgium, Denmark, Finland, Norway and Britain. Only Austria came anywhere near Ireland, with 10 per cent VAT.
"Ireland's punitive 12.5 per cent which is essentially a tax on information has had a number of serious effects on the indigenous newspaper industry." These included the costs to readers and consequent lost sales an increased dependence on advertising revenue distortion in competition between newspapers and other media lost jobs and damage to the pluralism and diversity of the indigenous written press, he said.
Independent and vibrant media were an essential component of modern democracy, said Mr Sold. In the context of an expanding EU strong indigenous media were crucially important to the national identity and to the cultural, social, economic, intellectual and political life of the nation.
Mr Sold said that among other issues discussed at the general assembly, held in Dublin to coincide with Ireland's EU presidency, was EU policy on media ownership. The newspaper publishers opposed it because it would mean smaller regional newspapers would be barred from diversifying into other areas and not able to take part in the growing multi media areas.
Mr Sold, president of the Luxembourg Association of Newspaper Editors, retired as president of ENPA after seven years. He was succeeded by Mr Alan Crosbie, chief executive of Examiner Publications in Cork.