Estonian media enterprises: Planned VAT increase on newspaper subscriptions a shock

Rumors have reached the Estonian Association of Media Enterprises that the government coalition decided on Thursday afternoon to raise the VAT rate on newspaper subscriptions by 4 percentage points Photo: Konstantin Sednev

Rumors have reached the Estonian Association of Media Enterprises that the government coalition decided on Thursday afternoon to raise the VAT rate on newspaper subscriptions by 4 percentage points without any analysis and without involving newspaper publishers, the association said.

CEO of the Association of Media Enterprises Merle Viirmaa said that such a tax increase would be a shock to national and local newspapers, as would come in addition to the general VAT hike that would already apply to media companies' advertising sales.

«For several weeks, we had been hearing rumors that in addition to the tax increases agreed upon in the coalition agreement and the government's work plan, the coalition was secretly plotting an additional VAT increase on newspaper subscriptions. But since the government did not involve us and presented the plan as a demand by the opposition, it has now become clear that it was indeed the government's plan all along to deepen the unequal competition with digital giants and place the publishing of journalism in Estonia among the most expensive countries in Europe -- which is indeed the group we would belong in with a 9 percent VAT rate,» Viirmaa said.

The collective business result of the members of the Estonian Association of Media Enterprises was negative in 2021, and according to the CEO, the tax increase can only come at the expense of cuts.

«Those who can will cut investments; those who can't will cut jobs. A significant number of the 850 journalist positions in Estonia will certainly be affected because the operating environment for journalism has deteriorated significantly over the past year -- the price of paper and other costs have more than doubled during wartime, and the outflow of advertising revenue from the Estonian media market has accelerated. Estonia is the only country in Europe where VAT on newspapers is increasing,» he noted.

«While there was a lot of talk about the importance of free press, dealing with Russian-language media, and the need to improve the public space in the wake of COVID-19 and Russian aggression, those words mean nothing in the light of the government's actions. What is most astonishing is the lack of professional and open dialogue and, frankly, the incompetent arguments. The claims made by some government politicians that they had no alternatives have proven to be false. The VAT directive actually provided various solutions for the press that would not have affected the state's revenues. Misleading arguments, secrecy, and a lack of dialogue deepen media companies' disappointment in the government,» Viirmaa concluded.