Government called on to reduce Vat on newspapers to zero or see closures 

National and local newspaper editors and publishers have pleaded for Vat on newspapers to be reduced to zero in the forthcoming budget, amid a cost crisis in the industry.

The Government must reduce Vat on newspapers to zero or we will see closures very soon, TDs and Senators have been warned.

National and local newspaper editors and publishers have pleaded for Vat on newspapers to be reduced to zero in the forthcoming budget amid a cost crisis in the industry.

In a briefing at Leinster House attended by almost 50 TDs and Senators, a joint presentation from NewsBrands (the representative group for national papers) and Local Ireland (the group representing local and regional papers) set out the challenges being faced by the industry in the face of unfair competition from online platforms.

Leading national and local newspaper editors were also in attendance.

Three disruptive trends

The bodies said that three key trends have disrupted news publishing in the past 10 years.

They are the rise of digital platforms: they hold 85% of the digital ad market in Ireland, and have proven very difficult to negotiate with regarding fair payment for their use of news publishers’ content; the decline in print sale,s and the decline in advertising revenues.

However, since the start of the year, energy costs have increased three-fold while the cost of paper for printing has gone from €390 per tonne to €960 per tonne.

The briefing was told that the audience for domestic journalism has never been higher across print and digital platforms at 82%, but this growing audience has been difficult to monetise.

The digital news ecosystem rewards the distribution of content by platforms vastly more than its creation by publishers. A study in the UK found that news content is worth £1bn to Google and Meta.

The lobby groups argued that Vat on newspapers is a tax on information, learning, and democracy.

Highest Vat rate in Europe

At 9%, Ireland has one of the highest Vat rates on newspapers and digital subscriptions in Europe, they said, and 22 European countries have lower rates of Vat on newspapers, as well as providing other direct and indirect supports for journalism.

Under new EU Vat rules, agreed by the EU finance ministers, Ireland can now apply a zero rate of Vat to newspapers and digital subscriptions. The Future of Media Commission has also recommended a zero rate be applied.

Speaking at the event, Paul Mulvaney, Managing Director of the Irish Times Group, which publishes the Irish Examiner, said it is really important to move to zero Vat but more importantly it needs to happen quickly.

“It is really urgent because we have the decline in print sales, so we need to move to digital. Digital is ultimately a better value product for our readers. And we need support to be able to do that,” he said.

“It is also really important that we can compete with others. If we look up north, there is zero Vat on newspapers already, that's all we're looking for. There's zero Vat on books in the South as well. So this is something that the Government can do now,” Mr Mulvaney said.

Colm O’Reilly, CEO of the Business Post said a Vat reduction would represent a significant stimulus for both local and national news publishers.

At a time of significantly increased business costs, it will provide the sector with the financial leverage to continue its investment in the transition to digital and facilitate the ongoing investment required to support publishers in their continued transformation to competitive online models, he said.

Frank Mulrennan, CEO of the Celtic Media Group of local papers, gave an impassioned speech about the relevance and importance of such journalism to communities across the country.

Quoting Ernest Hemmingway, he posed the question about how someone can go bankrupt. “Two ways…Gradually, then suddenly.” He said just because newspapers have been around for a long time does not mean they cannot slip away quickly if assistance does not come.