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Exempt Us! Statewide Coalition of Free Newspapers in California Unite to Seek Sales Tax Exemption; Charge CNPA with Doing Too Little Too Late

Magazine article Editor & Publisher

Exempt Us! Statewide Coalition of Free Newspapers in California Unite to Seek Sales Tax Exemption; Charge CNPA with Doing Too Little Too Late

Article excerpt

Exempt us!

Statewide coalition of free newspapers in California unite to seek sales tax exemption; charge CNPA with doing too little too late

Driven by a fear that many free-distribution newspapers will be wiped out by California's new sales tax on the press, a major campaign was mounted last week to exempt them from the levy.

A statewide coalition of community alternative papers and college papers, calling itself the California Free Newspaper Association (CFNA), met in San Jose to fight what they termed a "disproportionate burden" they must bear under the new tax bill voted by the Legislature and signed by Gov. Pete Wilson to help rescue the state from a $14.3-billion budget shortfall. It became effective July 15 (E&P, July 20).

Simultaneously, the California Newspaper Publishers Association, launched its own drive to get the free papers off the tax hook. Each group contracted with private lobbyists for the effort but, despite the CNPA's move, some free-paper publishers blamed the association for not working hard enough to kill the tax measure in its early stages. Michael B. Dorais, CNPA's former general manager and chief lobbyist, was singled out for an alleged token effort to defeat the tax bill. Dorais vehemently denied the accusation.

The bill raises the state's basic sales tax of 6% by 1.25%. However, some cities and counties impose an additional sales tax, which could lift the total tax in some areas to as high as 8.25%.

At the same time, the lawmakers removed the long-standing sales tax exemption from newspapers and periodicals, along with such items as candy and snack foods.

The free papers complain they cannot pass along the tax to readers and will meet fierce resistance from advertisers asked to absorb the increase.

Said Ted Fang, publisher of the 231,000-circulation San Francisco Independent, "As a businessman-advertiser, I wouldn't hold still for an extra 8.25% increase."

Fang predicted that his newspaper will fold if the sales tax remains.

The free newspapers assert that, proportionately, the tax on them will be at least 40% greater than on the paid-circulation dailies, a figure CNPA does not dispute.

Dan Pulcrano, president of the Sacramento-based California Free Press Association, termed AB-2181, the tax bill, "unfair and discriminatory."

He pointed out that paid papers can shift the increase to their subscribers, an option not available to free papers. Some California dailies already have raised their circulation prices.

Under the bill's provisions, he added, the giveaway papers will be taxed on paper, ink and photos they buy, plus labor used in the printing process. Most free-circulation papers rely on outside commercial printers.

William H. Fleet, publisher of the Los Angeles Independent (circ. 200,000) said the tax also will penalize purchasers of inserts used in free papers, but will not touch preprints in paid publications or in free-advertising media such as the Pennysaver and junk mail circulars.

The campaign by the free-newspaper publishers quickly produced one ray of hope for rescinding the newspaper tax law. At CFNA's urging, Assemblyman John Burton (D-San Francisco) introduced a bill on July 17 that would exempt free papers from the new bill. A committee hearing on the measure will be held on Aug. 19.

Bruce B. Brugmann, publisher of the San Francisco Bay Guardian and co-chair of CFNA, said two similar bills are being prepared in the state Senate.

Steve McNamara, editor and publisher of the Pacific Sun in Marin County and president of the California Association of Alternative Newsweeklies, wrote to Gov. Wilson, expressing the belief that, under the tax, many alternative papers "will be crippled or killed while their prosperous competitors suffer no similar consequences.

"At a time of increasing group media ownership and the constriction of points of view, free papers are the only countervailing trend toward diverse editorial voices," he went on. …

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