Newspaper Nightmare

Arkansas newspapers may have to cough up about $22 million in taxes annually if state Sens. Dave Bisbee, R-Rogers, and John Riggs, D-Little Rock, have their way.

Bisbee said newspapers have been avoiding taxes that other business in the state — including other media such as radio and television — have to pay.

Bisbee and Riggs proposed Senate Bill 106, which would mandate taxing newspapers on advertising revenue.

But Bisbee said on Jan. 17 that the two lawmakers were pulling SB 106 from the floor of the 83rd Arkansas General Assembly. They discovered that newspapers are exempt from the law because they claim to provide a service instead of manufacturing a product.

But at the same time, newspapers have a tax exemption on the purchase of things like presses, newsprint and ink because they claim to be manufacturers.

Bisbee said they can’t be both. The majority of newspaper revenue comes from advertising sales, he said, so newspapers should be classified as service providers, which means they wouldn’t be eligible for a manufacturer tax exemption.

“We will oppose it vigorously,” Dennis Schick, executive director of the Arkansas Press Association, said of the proposed legislation.

Schick said the U.S. Department of Finance classified newspapers as manufacturers. The newspaper tax exemptions were made by the state Legislature, and are in line with similar legislation across the country, he said.

Schick said Bisbee had been critical of newspapers in the past.

“If he’s doing this as a spiteful way to get back at newspapers, that’s not good public policy,” Schick said.

As of Jan. 18, Bisbee had yet to introduce a bill to change the tax status of Arkansas newspapers.