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Protesting sweeping VAT hike, newspapers blank front pages

Faced with a government proposal to jack up value-added tax (VAT) for newspapers from 6 to 23 percent, most major Slovak dailies made their front pages blank on November 11. This however didn't prevent the ruling coalition from passing the bill to a second reading in parliament a day later.
The tax hike is aimed at all periodicals which devote more than 10 percent of their content to advertising, erotic or pornographic material. The Finance Ministry originally planned to tax newspapers with at least 50 percent advertising content, saying that this was compatible with European Union (EU) legislation, but the taxable limit was reduced after the proposal was discussed in the cabinet.
Cabinet members refused to disclose which minister made the proposal, but some newspapers, citing anonymous sources, reported that it was Ivan Hudec, the Culture Minister. At the beginning of October, Hudec had made public statements showing his dissatisfaction with the media.


Prime Minister Vladimír Mečiar reads his HZDS-sponsored newspaper, Slovenská Republika, which was the only major Slovak daily not to protest the recent VAT hike on publications.
Peter Brenkus

Faced with a government proposal to jack up value-added tax (VAT) for newspapers from 6 to 23 percent, most major Slovak dailies made their front pages blank on November 11. This however didn't prevent the ruling coalition from passing the bill to a second reading in parliament a day later.

The tax hike is aimed at all periodicals which devote more than 10 percent of their content to advertising, erotic or pornographic material. The Finance Ministry originally planned to tax newspapers with at least 50 percent advertising content, saying that this was compatible with European Union (EU) legislation, but the taxable limit was reduced after the proposal was discussed in the cabinet.

Cabinet members refused to disclose which minister made the proposal, but some newspapers, citing anonymous sources, reported that it was Ivan Hudec, the Culture Minister. At the beginning of October, Hudec had made public statements showing his dissatisfaction with the media. "I don't have the right to manage media because the law doesn't allow me to, but it is certainly a big drawback that should be solved... through a new structure and new set of rules for existence of media in Slovakia," he said.

Neither Hudec nor the cabinet have announced whether the proposed hike is the cornerstone of such a set of rules, but independent publishers are convinced that if the bill is passed, it will tear the entire Slovak newspaper market into shreds.

Against the proposal

"Most papers would be faced by financial ruin if this happened," said Ján Füle, chairman of the Slovak Syndicate of Journalists (SSJ), who led about 100 journalists in front of the parliament on November 11 to lobby deputies to reject the scheme.

"We want the VAT to remain at its current level and that is why we are appealing to deputies to reject any manipulation with VAT on newspapers," Füle said, handing a memorandum showing the effect the VAT increase would have on the country's independent media to deputies arriving for the parliament session.

According to SSJ analysis, the proposal would jack up the price of one newspaper copy from six or seven crowns to about 10 crowns, which would result in about a 20 percent drop in all papers' circulation .

"So far, every price hike has had a direct negative influence on papers' circulation," the analysis reads, highlighting the fact that while in 1990 the combined daily circulation of Slovak papers was 1.5 million, last year it was only 680,000. Countries with comparable population such as Denmark, Norway or Switzerland have 350-650 copies of daily paper per 1000 people, the analysis continues, in Slovakia that number has recently dipped under 150.

"We call on parliament to reject the proposal, which is economically implausible and politically unjustifiable," read the Association of Newspaper Publishers' protest statement that dominated otherwise blank front pages of most nationwide Slovak dailies on November 11. Over the five preceding days, the statement had grown bigger on front pages, gradually expanding the blank space and squeezing out space for news. The only nationwide daily who didn't join the protest was the openly government-sponsored Slovenská Republika, who accused the protest of being organized by former communists and opponents of an independent Slovakia.


About 100 journalists gathered in front of parliament November 11 to lobby parliamentarians not to vote for VAT increase.
Ján Lörincz

"Tuesday's funeral oration for the free press was organized by the very same journalists who welcomed the birth of the Slovak state with black-framed newspapers," wrote Ján Smolec, the paper's former editor-in-chief and a HZDS deputy. "They have used the government bill to unleash a huge campaign against Slovakia."

"While we fought for Slovakia's independence, SSJ members were taking over a huge amount of property which their native Communist Party of Czechoslovakia gave them for good service," continued Smolec, who heads the SSJ's rival organization, the Association of Slovak Journalists.

Defending the government's proposal, Smolec said that neither French, nor Italian nor Japanese newspapers have as much advertising as Slovak ones. (The issue of Slovenská Republika in which Smolec wrote this contained 13.33 percent advertising.)

While admitting that the proposal could put some papers out of business, Smolec said it is hardly realistic for 800 publishers to go on existing on the Slovak market. "Discussion of the amendment... is being unnecessarily politicized," he concluded. "In no case is press freedom going to be destroyed." Smolec's party-mates also proved unaffected by the lobbying. "I do not see [the proposal] as suppressing freedom of speech," said Ivan Gašparovič, Speaker of the Parliament. "I am convinced it is not," he told a news conference before the session started.

Defending the move, Gašparovič, a member of Mečiar's ruling Movement for a Democratic Slovakia (HZDS), said he himself was still undecided how he would vote. Other politicians of Mečiar's ruling coalition have defended the tax increase saying it would affect mainly those periodicals publishing pornography.

"But dissemination of pornography is prohibited in Slovakia by ¦205 of the Penal Code and can be punished by imprisonment of up to one to five years," Füle said.

"Instead of punishing pornography, this government aims to tax it," echoed Mikuláš Dzurinda, an opposition Slovak Democratic Coalition leader, during the dispute in the chamber.

The next day, deputies passed the bill to the second reading which means that if they are quick, they can make it a law at the November session. However, the opposition has already indicated it would appeal to the Constitutional Court if that happened.

Passing of the bill would certainly not help Slovakia's image abroad. Last month, the European Parliament recommended that VAT for papers in EU member states should be abolished. Asked to comment on a possible Slovak Parliament's green light to a vehicle moving in the opposite direction just one month later, the Slovak Foreign Ministry spokesman, Milan Tokár, admitted that the move will probably worsen Slovakia's image abroad.

"The Foreign Ministry believes that the importance of the problem has been underestimated," Tokár said, adding that the measure would "certainly not have good consequences" for Slovakia's international position before the European Union (EU) Luxembourg summit which is expected to make a decision on which associate members will be invited for membership talks.

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