2005 July

Task Forces Consider Ending Newspaper Sales

By Joel Campbell, UPA Legislative Monitor

SALT LAKE CITY -- Members of a tax reform subcommittee will hear public comment on a proposal to repeal more than two dozen sales tax exemptions during a meeting on July 13, while another task force is expected to consider some exemptions for e-mail in Utah’s public records law on July 19.

Meeting June 16, the Sales and Use Tax Subcommittee voiced support to repealing 28 sales tax exemptions including the exemption for sales of newspapers or newspaper subscriptions. A related part of the proposal could also create new taxes on services that might include advertising sales. Some observers, however, suggest that any major sales tax reform may be bogged for at least another year because of the complexity of the issues involved.

The Sales and Use Tax Subcommittee will meet on Wednesday, July 13, at 8 a.m. in Room W125 of the west legislative office building behind the State Capitol. Any subcommittee proposals must be approved by the full Tax Reform Tax Force, which could make recommendations to the Legislature in December.

Members of the Sales and Use Tax Subcommittee said at their June meeting they supported the idea of repealing the tax exemptions as part of a broader plan to expand the state’s tax base and lower the overall sales tax rate. They stopped short of voting on a proposal, saying the idea need more public comment.

The sales tax subcommittee’s driving philosophy is the elimination of about half of all tax exemptions except those that relate to governmental or non-profit activities. It would also allow “business inputs,” goods or services used by a business, to remain exempt. The committee also wants to begin studying adding new taxes on services in Utah. The panel heard testimony from Dr. Gary Cornia, a BYU public finance professor, who supported the plan to reduce the number of tax exemptions in the state and increase the amount of sales taxes generated through services.

Lawmakers say they need to find about $4 billion in revenue to offset reducing the state’s sales tax rate.

Task Force members, including Chairman Rep. Curt Bramble, R-Provo, and influential Sen. Howard Stephenson, R-Draper, have been vocal in their calls to end the newspaper sales and subscription tax exemption, saying it is not a business input.

Under a plan modeled after recommendations made by a committee created by former Gov. Olene Walker, Utah Tax Commissioner Pam Hendrickson proposed that the subcommittee move forward with a plan that leaves about half of the current 68 tax exemptions in place. Those that would remain include government sales, sales of media to commercial broadcasters, machinery and parts used in manufacturing, and food purchased with food stamps,

Along with newspaper sales and subscriptions, aviation, motor and special fuel sales, vending machines sales, dry cleaning sales, non-resident car and boat sales, and school fund raisers would lose their exemptions. According to the Tax Commission, newspaper sales and subscriptions amount to about $2.5 million each year in lost revenue.
Members of the Sales and Use Tax Subcommittee include:

Rep. Wayne A. Harper, Sen. John L. Valentine, Rep. Ralph Becker, Utah Tax Commissioner Pam R. Hendrickson, and Rep. Todd E. Kiser.

Members of the Government Records Access and Management Task Force, meeting June 14, also proposed restricting some access to e-mail records. In particular, some legislators are seeking a “legislative privilege” for constituent e-mail.

Legislators expect to have language for consideration at its July 19 meeting at 1:30 p.m. in Room W125 of the new west building behind the State Capitol. Legislators want to consider language that would make public only records that are prepared “in connection with the transaction of public business.” At the same time, they want to make material received or prepared for “personal use” to not be considered a public record.

Along with new definitions for electronic records, the GRAMA task force is expected to consider charging “fair market value” for public records for commercial requesters of records. That issue will be explored at the July 19 meeting.

Utah Press Association Opposes A New Tax On Newspaper Sales And Subscriptions

Since at least 1937, Utah, like more than 30 states, has exempted newspaper sales and subscriptions from state sales tax. Newspapers sales tax would be paid not by newspaper publishers, but by the more than 667,000 members of the public who purchase or subscribe to weekly and daily newspapers throughout Utah.

The circulation tax on newspapers is a bad idea whose time should never come. Such a tax would essentially be a levy on the free flow of information in our society, and is therefore contrary to the public interest. Utah’s newspapers are critical to a democratic society. Newspapers are not manufactured “outputs” or “products.” Newspapers are the information source for in-depth coverage of local government, politicians, school boards and public issues, as well as job openings, housing, and transportation. In addition, Utah statute mandates publication of hundreds of legal notices in local newspapers. Taxing public access to such vital information is unwise.

In 1990, the Iowa Supreme Court ruled an exemption in Iowa was justified. Among other reasons, the court said that the state of Iowa could exempt newspapers from the sales tax since local newspapers were the only source for detailed local news and that those newspapers served the citizenry by providing information and enhancing the literacy of the population.

To require newspapers to pay a tax for distribution of its product would be discriminatory since other media would not have to pay a similar tax. This would put newspapers at a distinct competitive disadvantage since radio, television and free newspapers would not have to pay a similar tax. To single out newspapers as the only source of news and information to be taxed is unfair and possibly unconstitutional.

A newspaper sales tax will have a disproportionate impact on Utah’s 48 rural, weekly newspapers. These newspapers simply are not in a financial position to absorb the tax or pass it along to their readers. These “little” newspapers are not little to the communities they serve. They are a cultural resource and the lifeblood of these communities. Even in the best of times, however, they are financially marginal operations. The loss of these editorial voices will be a loss for Utah.

Lawmakers and policy makers have voted to keep the exemption. In late 1994, the Tax Review Commission conducted a comprehensive study of the newspaper sales tax exemption and, for many of the reasons articulated here, concluded that it should remain in place. Similarly, during the 1999 Legislative Session, the Utah House of Representatives overwhelming rejected the imposition of a newspaper sales tax by a 2-1 margin. In 2000, the House Revenue and Taxation Committee killed a similar bill.

For all but Utah’s two largest daily newspapers, a sales tax on daily newspaper sales will be a nightmare to administer, collect, and fairly enforce. It is simply not feasible to require thousands of independent contractor carriers, most of whom are boys and girls, ages 12 to 14, and who have an annual turnover rate in excess of 100 percent, to collect and remit this tax. Nor does an approach proposed in earlier legislative sessions -- moving the collection obligation back to the wholesaler or publisher level -- solve the problem. Wholesalers and publishers do not keep books on an independent carrier’s retail collections, and therefore have no means of gathering and reporting the tax. A substantial portion of many daily newspapers’ circulation is based on newsbox sales. It would be difficult, if not impossible, to adjust coin boxes to collect the tax. Consequently, newspapers would have to “eat” the tax.

For More Information, Contact the Utah Press Association, 801-308-0268

State By State Summary Of Sales Tax On Circulation Income

* Taxable in Denver City and County only
** Over the counter sales taxable
*** Subject to gross receipts tax

Newspaper Association of America
International Newspaper Financial Executives

Senate Votes To Restore Common Sense Fax Regulation

National Newspaper Association President Mike Buffington, editor of The Jackson Herald, Jefferson, GA, announced today that the United States Senate has approved the Junk Fax Prevention Act of 2005, S. 714, which restores businesses’ ability to fax to their customers.

The Junk Fax bill, sponsored by Sen. Gordon Smith, R-OR, and a bipartisan coalition of senators on the Senate Commerce, Science and Transportation Committee, is at the top of NNA’s legislative agenda in the 109th Congress.

The bill overturns a Federal Communications Commission rule requiring businesses to obtain and preserve signed consents from customers before sending such faxes as ad proofs, rate cards, special promotions and other advertiser communications. The FCC in June, 2003, ended its recognition of a business’s right to fax to its established customers and said it would instead require signed consents as proof that the faxes are not unsolicited.

Unsolicited commercial faxes have been prohibited under the Telephone Consumer Protection Act since 1991. But routine business use to customers had been considered permissible until 2003. The FCC extended its requirement, however, in two orders. The existing deadline is currently July 1, 2005.

Buffington thanked Sen. Smith, and also expressed his appreciation to his fellow directors, Jon E. (Jeb) Bladine, publisher of The News-Register, McMinnville, OR, and Cheryl Kaechele, publisher of the Allegan County News, Allegan, MI, who appeared before Congress to testify about the use of newspaper faxes to advertisers.

“The FCC really stepped off the pier in its 2003 order,” Buffington said. “It became clear that the Commission didn’t realize what a burden it was placing small business. We are grateful for the leadership of Sen. Smith, and of the Committee chairman, Sen. Ted Stevens of Alaska, and the leading Democrat on the committee, Sen. Daniel Inouye of Hawaii, for giving the FCC a new set of rules for business faxes, and turning back this onerous signed consent rule.”

S. 714 is expected to be approved by the House of Representatives shortly.

The new law will require businesses to provide an opt-out notification on their faxes to every recipient that offers a cost-free mechanism to request removal from the fax list. The FCC is expected to issue new regulations governing faxes, in compliance with the law, before Junk Fax Prevention Act is enforced.

NNA will provide further guidance to its members on compliance.

Getting To Know Kirk Parrish, UPA’s IT/ 2x2 Manager

Born in the rural town of Roosevelt and raised in beautiful Cache Valley, I started at Utah Press in the fall of 1997. Hailing from a family of eight, working in small crowd control has never been a problem. Ma and Pa Parrish are still in Cache Valley, as is most of the rest of the “crowd”. Ma is the Richmond City Librarian, and Pa is a painter.... of walls that is. He works for Utah State University, keeping the housing walls still looking white after years and years of frat boys deciding they need to be a more “stained” color. Currently one older sister and I live in Salt Lake Valley. Terryll (and Alan) are raising a beautiful family in the Magna Times/ West Valley News Region. The Herald Journal Region harbors the rest of the rug rats, although the next older sister, Christy, is heading to South Africa for charity work. Then there’s me, the first boy, and three younger boys. Daniel is serving in the Army in the thick of things over in Iraq. Anthony is raising another beautiful Parrish family, and James is wandering aimlessly in the northern regions of Utah (that means, “I think he’s selling his house and moving...”).

After turning 21, my mother forced me to eat my vegetables and so I moved to Salt Lake City. A friend from High School got me a job at Ken Garff Body Shop, and just as I was getting really good at washing expensive cars is when the light of Utah Press hailed down on me. Taking over for a receptionists position that was abandoned and desperately needed attention, I was able to piece together a job that was left with no instructions and pretty much in shambles. Taking what I learned washing cars, I got right to work on the computer and organized the Clipping Bureau into a more simple, well oiled job (5 day billing process into a couple hours of easy work). Washing cars? What I meant was - the hours upon hours at the age of nine programming my Dad’s Commodore 64 to play music and get little text figures to dance across the screen. Computers are second nature to me and I owe it all to my Pop for sitting down and showing me all he knew about these weird conglomerates of electronics and plastic.

Not expecting to stay at Utah Press, I wanted to work with computers so I started school in Computer Graphic Design, wanting to try the creative side of life. After finishing up with that short 2 year stint, I discovered that I enjoyed fixing the computers I was designing on better then the actual design. After a break from the grueling hours of night school, I quickly forgot the pain of studying and started night school again in MCSE (Microsoft Certified Systems Engineer). Another 2 years and 6 agonizing tests later I was certified to break some one else's computer and not just my own.

And now, almost 10 years later, I’m still at UPA and loving every minute of it (they gave me the title IT Manager... what was I suppose to do.... leave?). My duties at UPA have changed, but my attitude has not, “I’m getting out of here as soon as I can”, so you can expect me to be here another 10 years. How do you leave a job that everyone you work with is awesome and they treat you this well?

Aside from managing the desktops and servers in the office (and anything else that plugs into the wall; fax, phones, ) I currently am in charge of the 2x2 network, editor for Pressing Issues, web master for both utahpress.com and utahnewsearch.com, and designer of several Utah Newspaper Websites (Got web? Need it? Call Me?), coordinating weekly Newsearch seminars, inhouse trainings on Newsearch, and the hardest part of my job is dealing with the new Ad Manager, Arinda (never move in next door to someone that could possibly start working where you do) She’s mean and picks on me.

After such a grueling day, I go home and relax by remodeling my house, or doing yard work, OR network hundreds of ancient computers together to take over the world.

GOING ALL DIGITAL

Pressing Issues is going digital, all digital, all the way. We will produce a hard copy for those that request it (or have previously requested just hard copy), but we want to limit this list to only those that need it printed.

Although we are a print industry and going digital may seem contradictory, we are also in the business of getting information out, and getting it out fast. We feel this move will help in that endeavor.

To sign up please go to www.utahpress.com and use the simple form on the home page (left hand side under Mailing Lists). Please contact Kirk at 801-308-0268 or kirk@utahpress.com with any questions.