Vat Would Force Mass Regional Closures

Imposing VAT on the cover prices of newspapers would force 20% of regional titles to close, according to an independent report commissioned by the Newspaper Society.

The report, carried out on behalf of the Society’s members, concluded that 245 of the 1,265 regional newspapers would close. The total circulation of paid-for titles would be reduced by over one million and around 2,500 jobs would be lost from the industry. The Government is likely to impose 17.5% VAT on newspapers at the next budget possibly with immediate effect. The report suggests that such a move would have far reaching effects. If cover prices are increased then sales will fall, giving lower household penetrations and ultimately resulting in reduced advertising volumes.

Dugal Nisbet-Smith, the Newspaper Society’s director, suggests “The effects of a 17.5% tax on the regional press, with the industry still reeling from one of the worst recessions in living memory, would be catastrophic.” The report refers to the introduction of VAT on newspapers in Eire. The level was first set at 23% but has since been reduced to 10%. EC regulations dictate that if the British Government imposes the 17.5% level it would not be allowed to revert to zero rating.

The study was carried out by Price Waterhouse and involved 255 independently selected titles representing a cross section of the regional market.

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