News / 22.06.2011

Mixed reception for the new Finnish government programme

Linus Atarah

After several weeks of negotiations to form a government, once broken off due to deep differences over taxation among parties, the new Finnish government has finally come out with a government programme which has won a thumps-up from labour unions but ruffled feathers among newspaper publishers.

Trade union leaders have warmly welcomed the new government’s strong emphasis on close cooperation with labour market organizations to co-ordinate economic and employment policies and labour legislation reforms.

But the six-party coalition led by former finance minister Jyrki Katainen of the conservative National Coalition has announced that it will slap a value added tax of 9 per cent on newspaper and magazine subscribers, which has generated a chorus of dismay among journalists and newspaper publishers.

“I am very much against that because if implemented it means an awful lot of our newspapers will have to quit and we will lose jobs and our information gathering capacities. Only the richest newspapers will survive that”, said Arto Nieminen, President of the Union of Journalists in Finland (SJL).

A valued tax on newspaper subscribers means that all the small newspapers will die and all the political newspapers will be in “deep, deep, deep trouble” after that. The ultimate implication is that information presented to the public will be one-sided. Nieminen said

In spite of its unpopularity the government has still proceeded with the measure because they only think about how to finance the public sector. Finland has a lot of public debt – even though not in the range of Greece and Portugal – which has to be financed on a long-term basis but a VAT on newspapers and magazines is not the way to do it, Nieminen said.

A value-added tax of 9 per cent on magazines and newspaper subscription is estimated to generate 83 million Euros revenue for a new government desperate to staunch a spiraling public debt increase, but has failed to consider the implication it will have on the rest of society.

“They are only looking at the figures and not what comes after that, only the figures matter”, said Nieminen.

A zero tax base for newspaper subscription means that subscribers can acquire newspapers cheaper and that is considered very important from the point of view of information dissemination and public debate”, said Håkan Gabrielsson Executive Director of Finnish Newspapers Association.

The Newspaper Publishers Association also says that a valued-added on will adversely affect employment in the paper industry and related sectors.

Up until now there has not been a tax on newspapers in Finland and that has encouraged a lot of newspapers subscription – most newspapers in Finland are subscribed unlike in many developed countries where newspaper are mostly purchased on a single copy basis.

However, the new government has provided assurance in its programme that it will strengthen the finances of the Finnish Broadcasting Company (YLE), the state broadcaster, for it to continue with its operations.

“From YLE’s point of view it is highly valued that the government wants to maintain funding which will secure the services of YLE. The decision shows that even parties with different ideological persuasions value the operations of YLE, said YLE’s Director, Lauri Kivinen, when informed of the government’s decision.

However the government plans to reform the funding mechanism of the state broadcaster but it is not yet clear if the current practice of television licensing fee will be replaced by the proposed public broadcasting fee paid by all households discussed three year ago.

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