EU pushes Estonia to tax newspapers

TALLINN – It seems that no clear answer can be reached on the question of whether Estonia's newspaper subscribers will face a tax hike in the near future. No stranger to the government's checklist of issues, the Value Added Tax has become something of a fusillade between the Estonian Newspaper Association and the Ministry of Finance.

Why would a tax be placed on newspapers at all? The European Union has pressured Estonia to do so, according to Finance Minister Siim Kallas in an Eesti Paevaleht report.

Tarmu Tammerk, the Estonian Newspaper Association's chairman, downplayed the EU directives to abolish zero percent VATs, pointing out that several member states – the United Kingdom, Denmark, Finland and Belgium – all have a zero percent VAT on newspapers.

"True, Estonia is an applicant and the European Commission wants us to follow the existing laws, but Estonia surely has the chance to raise this issue in accession talks and say, 'Listen, we don't want to raise this tax,'" said Tammerk.

He argued that Estonia is trying to earn "brownie points" with the EU by scrupulously pursuing any recommendation given by the union, and that euroscepticism will spread if the country's leaders continue to meekly yield to Brussels.

Throughout the past four years, government initiatives to raise the tax have been repeatedly shot down by opposition to the tax – namely the newspaper association.

Tammerk said the Finance Ministry has broken its promise not to pursue legislation on the tax without consulting them first.

"We discussed this last August with the Finance Ministry. . .the minister said he does not agree with our reasoning, but they would consult us. Now we learn from government sources that [taxes may be raised]," he said, with fire in his voice.

Tammerk said that a meeting was called, and the Finance Ministry told him to calm down: the proposal to raise the VAT for newspapers was not being actively discussed, and it would be premature to say anything more.

"I don't think it is true," Tammerk declared of the ministry's reassurance. "They are trying to pacify us to stop putting on the stop light; meanwhile they do whatever they want."

Daniel Vaarik, adviser to the Finance Ministry, quickly spurned the claims. He maintained that the ministry has not made any changes yet, suggesting that outcries made by the Estonian Newspaper Union are gratuitous.

"[The tax] isn't imminent at all. It just suddenly happened again that the newspaper union started to react," said Vaarik. He conceded that a five percent VAT may occur eventually, but an 18 percent hike, the maximum tax, is out of the question, in contradiction to a Feb. 23 Postimees report.

Vaarik also reiterated that no tax will be added to books, as reported in Postimees.

No legislative amendment drafts related to the VAT on books have reached the Ministry of Culture, according to spokeswoman Reet Weidebaum.

Hanno Tonberg, editor in chief of Eesti Paevaleht, said he had no knowledge that the pact between the Estonian Newspaper Association and the Finance Ministry had been broken, but he professed it would be "outrageous" if indeed taxes were to be slapped on newspapers at the maximum 18 percentage rate.

"Of course our subscriptions would be affected then. Currently, the Estonian newspaper market is quite tight, and it would put all the papers into a bad situation," said Tonberg.

The Estonian linguistic community is small, Tammerk asserted, with just over a million speakers, and the need to protect the cultural heritage is legitimate.

"Estonian papers will never threaten the Times of London or Le Monde of France or Allemagne of Germany. We will not steal their readers," he said.