Date

Fri - 22.09.2017


VAT puts Finnish newspapers under pressure

VAT puts Finnish newspapers under pressure

On November 23 last year the Finnish parliament approved a government proposal to apply 9% VAT to newspaper and magazine subscriptions, which were previously exempt from the tax.

Today the European Journalism Centre has published an article about how the new tax, which came into effect at the beginning of this year, has affected Finnish newspapers.

In a nutshell, it's been tough for journalists. The EJC magazine reports that 100 media workers have already been laid off as a direct consequence of the new tax. 200 more jobs are on the line.

The tax has been controversial, partly because of the way Finnish politician Kimmo Sasi, who argued for the imposition of the new tax, spoke out against the media: "The members of the press tend to be a bit arrogant. They think: "We can write whatever we want about politicians, and they will have to dance to our music. Luckily the majority of the Parliament is not going to accept this," quotes the EJC.

Sasi also criticized the quality of the Finnish media, comparing Finland's largest daily Helsingin Sanomat unfavourably with the quality of the British Financial Times. Petri Savolainen, director of the Finnish Union of Journalists argues that if there is a problem with the quality of newspapers in Finland, the new VAT is only going to make it worse: "If the tax is truly forcing newspapers to cut down on staff, how are they going to make better quality with less journalists and busier days?" the EJC quotes.

A tax on newspaper subscriptions has had a particularly major impact in Finland because, as Helsingin Sanomat reports, it is far more common in Finland to subscribe to daily papers than to buy individual copies at the newsstand. Tax on individual newspapers stands at 23%.

Newspapers already began preparing for the extra cost of VAT before the new tax was voted into law. This caused resentment among some journalists, who doubted that the redundancies were necessary. Savolainen is quoted by EJC "real financial imperatives for layoffs are almost non-existent. Most of these papers are financially stable and successful."

The EJC reports that, in particular, the VAT has effected small, local publications, which were already under financial pressure from the global economic crisis.

However Jukka Holmberg, director of the Union of Newspapers, is quoted, saying that even if journalists at regional papers lose their jobs "I don't believe that regional papers are dying. In the long run the tax might be a threat only to small, financially unstable local papers."

The news is not so reassuring for Finnish political party newspapers. According to an article published a couple weeks ago by the Finnish Union of Journalists, not only are the political party newspapers feeling the crunch of the new 9% VAT, they are also being asked to pay large amounts of VAT in arrears on newspapers that were given free to party members. As of January 18, the case was still being discussed in court. The union names a few examples of the kind of amounts that party publications will be asked to pay; the Green Party will be given a bill of half a million euros, the National Coalition Party will have to foot payments of 800,000 euros.

The Finnish Union of Journalists writes that many political party newspapers are already under severe financial pressure and have been shut down; five regional Social Democrat party papers were closed at the end of 2011.

Political parties in Finland receive government funding to spread information about their activities, in proportion to the number of seats they have in parliament. However, this year that funding has been reduced from 18 million to 16 million euros.

Sources: The Finnish Union of Journalists (1) (2), European Journalism Centre, Helsingin Sanomat

Author

Hannah Vinter

Date

2012-01-30 18:44

Shaping the Future of the News Publishing


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