OLYMPIA — A new report suggests lawmakers revisit a 74-year-old state policy of not charging sales tax on newspapers sold in stores, racks and through home delivery.
It recommends the Legislature clarify whether they want to preserve the prohibition, which will cost the state an estimated $12.4 million in revenue in 2009. Wednesday, lawmakers on the Joint Legislative Audit and Review Committee were briefed on the exemption, one of 580 preferential tax policies in Washington. The panel of House and Senate members will recommend what, if any, action to take later this year.
“I think it’s a good idea to revisit the policy objective, I don’t think it’s a great idea to tax newspapers,” said Sen. Eric Oemig, D-Kirkland, who sits on the Senate Ways and Means Committee.
Sen. Joseph Zarelli, R-Ridgefield, the ranking minority member of that committee, shared the sentiment.
“I’m not inclined to put new taxes on things we are not currently taxing,” he said. “In my mind the newspaper exemption is probably safe.”
Of 45 states with a sales tax, 31, including Washington, exempt newspapers from the sales tax, according to the report. It took effect here in 1935 when the sales tax was established.
David Dean, a research analyst for the committee, said the Legislature likely acted out of concern a tax infringed on the First Amendment rights of the press. Little money would have been raised then since newspapers sold for only a few pennies and child newspaper carriers would have been put in the awkward position of tax collectors.
Circumstances — the economics, for example — have changed, requiring the Legislature to re-examine the policy, he said. If a newspaper retail sales tax was in effect in 2009, it would raise about $9.1 million for the state and $3.3 million for cities and counties.
Consumers, for whom this is a tax break, would see their 50-cent daily paper cost 54 cents and a 75-cent edition rise to 82 cents. The study also concludes imposing the tax would have only a modest impact on demand because of declining newspaper readership in recent years.
A citizen commission that evaluates tax preferences will hold a hearing on this exemption and two dozen others in September. Its recommendation will be sent to the legislative committee, which will act in December.
The report can be found online at www.leg.wa.gov/JLARC.
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