Tuesday, 12 Feb 2019 10:57 GMT

Digital 'should have same tax exemptions as print'

A new government-commissioned report has outlined recommendations to ensure the future sustainability of the British press in light of a challenging digital market.

The Cairncross Review, conducted by Dame Frances Cairncross in partnership with experts from print and publishing, was tasked by Theresa May in 2018 to investigate the ‘sustainability of the production and distribution of high-quality journalism.’

One of the recommendations suggests introducing new forms of tax reliefs to encourage payments for online news content and support local and investigative journalism.

Cairncross recommends extending the zero-rating of VAT to digital newspapers and magazines, including digital-only news publications, as the current arrangement discourages publishers from developing online payment systems.

A healthy democracy needs high quality journalism to thrive

The Review also recommends that government gives priority to exploring the development of a form of tax relief, ideally under the Charities Act but if necessary, along the lines of the Creative Sector reliefs, to support public-interest journalism.

Dame Frances Cairncross says: “The proposals I have put forward have the potential to improve the outlook for high quality journalism. They are designed to encourage new models to emerge, with the help of innovation not just in technology but in business systems and journalistic techniques.”

The report concluded that publishers are facing significant revenue challenges online and suggests more favourable taxes for online subscriptions, stating that some publishers see the BBC news website as an obstacle to selling online subscriptions.

Another reason for Britain’s digital journalism plight is the issue of subscription schemes. The report suggests that while some publishers do operate these kinds of schemes, UK consumers are much less used to buying papers on subscription than their American or European counterparts.


Print advertising revenues have dropped by more than two-thirds in the ten years to 2017

Department for Digital, Culture, Media and Sport Secretary of State, Jeremy Wright, says: “A healthy democracy needs high quality journalism to thrive and this report sets out the challenges to putting our news media on a stronger and more sustainable footing, in the face of changing technology and rising disinformation.

“There are some things we can take action on immediately while others will need further careful consideration with stakeholders on the best way forward.”

Chapter five of the Review focuses on the role of online news platforms and concludes that Google and Facebook are playing an ‘increasingly important role in the markets for both online advertising, and the distribution of news.’

Cairncross infers that the British Government must take steps to ensure the position of social media companies does not do ‘undue harm’ to publishers.

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