DESPITE a warning from the Minister for Finance against expectations of any change in next year's Budget, the national newspapers are keeping up their campaign against VAT with a formal submission to a Dail committee.
The VAT rate of 12.5 per cent on newspapers has damaged the pluralism and diversity of the written press, with unhealthy consequences for national and cultural identity, it is argued. It has also exacerbated the serious competition problem which newspapers here face from British imports, the national newspapers say.
In its pre-Budget submission to the Oireachtas Select Committee, on Finance and General Affairs, the National Newspapers of Ireland, the lobby organisation for 11 national newspaper titles, says British newspapers have been "steadily gaining market share in Ireland for many years and have now achieved a level of penetration which certainly has no parallel anywhere in Europe and may well be absolutely unique".
The NNI claims that British newspapers selling in Ireland have an advantage in terms of an economy of scale, which allows for the productions of glossy magazines and other newspaper additions, increasing their attractiveness.
The NNl believes British newspapers are using their advantages to "unfairly price their newspapers below cost in the Irish market".
The NNI says while British newspapers pay VAT on their Irish sales, they can absorb that tax and sell newspapers for the same price as in Britain, despite the VAT. In its submission, NNI says it agrees with the European Newspaper Publishers Association that information should not be taxed in a democratic society. It also holds that newspapers are not products and cannot be treated like other merchandise.
A lower VAT rate would close the price gap between Irish and British newspapers. It is also believed that because the VAT is already absorbed, British newspapers would not be able to drop their price with a VAT reduction, as Irish newspapers would.
In the context of a single market, all newspapers should be subject to a harmonised zero rate, as in Britain, "in the interests of press freedom, pluralism and diversity as well as fair competition".
The NNI says the VAT rate could be lowered within the EU regulations to about the European average of 5 per cent. It wants the Government to seek a derogation, allowing a zero rate to be applied, for as long British newspapers as enjoyed a zero rate in their market.
Permission from Brussels is needed to apply a zero rate on any goods or services. Britain has a zero rate which was in place before the EU regulation.
The Minister, Mr Quinn, has suggested the Exchequer would be unwilling to bear the cost of a reduction in VAT.