VAT 'would force 245 newspapers to close'

More than 200 local newspapers would close and 2,500 jobs be lost if the Chancellor introduced VAT on newspaper prices in the Budget, according to a report published yesterday by the Newspaper Society. A study for by accountants Price Waterhouse, 245 out of 1,265 newspapers would have to close.

MORE than 200 local newspapers would close and 2,500 jobs be lost if the Chancellor introduced VAT on newspaper prices in the Budget, writes Martin Wroe.

According to a study for the Newspaper Society by Price Waterhouse, a 17.5 per cent tax on the industry would lead to 245 out of 1,265 newspapers having to close, a fall in circulation of more than 1,000,000 copies a week and big rises in cover prices.

On top of this, the report argues, the Treasury would earn less than half of the projected pounds 135m annually from this sector. Government figures anticipate that VAT on newspapers, books and magazines would reap pounds 1bn annually.

Dugal Nisbet-Smith, the Newspaper Society's director, said: 'The effect . . . on the regional press, with the industry still reeling from one of the worst recessions in living memory, would be catastrophic. VAT on newspapers would be media-selective; newspapers would be the only medium at which a tax is applied as information is exchanged.'

While Britain and Denmark are the only two EC countries not to assign VAT to newspapers, rates vary greatly and are as low as 2.1 per cent in France. Britain would immediately have the highest rate in the community.

Tim Godfray, director of the Booksellers' Association, has written to every MP warning that VAT on books 'would be a body blow for education'. The Don't Tax Reading Books Group has produced a poster campaign to mobilise public awareness.