Norway:

Norwegian newspapers are facing a 15 percent cut in the governments press subsidies. The Minister of Culture, Sport and Media Ms. Lahnstein had to make a cut of approximately 4 mill. ECU in the ministrys spendings, and she decided to let the press subsidies suffer and to spare culture and sport.

A letter from the head of the major newspaper owner, Orkla, to Ms. Lahnstein , in which the system of subsidies were criticised ,heated the debate. Ms. Lahnstein however denied accusations of her playing the tune of Orkla. Orklas newspapers receive almost no press subsides, since almost all the newspapers are the leading newspapers in their local markets.

For 1998, press subsidies were cut with almost 2 mill. ECU, but the 1999 cut is far more severe since the revenues from advertising are dropping.

For the newspapers the subsidies materialise in the shape of cheques from the government, and for 1999 the total amount cashed out was 18,3 mill. ECU. The newspaper receiving the largest amount is the former social democratic daily ’Dagsavisen’ (The daily paper), which can expect government subsidies at a total of 4,5 mill ECU for 1999. 120 of the 210 newspaper s in Norway receive subsidies.

The system of press subsidies was introduced in 1969, and the subsidies are granted small newspapers with a circulation less than 6.000, and newspapers being the smaller in their market. Later on the arrangement have been prolonged, and right now the government is planning to set up yet another commission looking into the system and its position according to the current situation. The commission will also look into another matter, which have been advocated the last year: The newspapers exemption from VAT.

Norwegian consumers are paying a VAT of 23 percent, but newspapers (and books) are exempted from this tax. In Europe, the level of VAT of newspapers has varied greatly, from zero to full taxation. The weekly family and womens magazines are paying VAT.In their opinion newspapers are competitors in the market of conveying stories of the royal family, celebrities and general television material, thus the taxation should also be equal. The Norwegian Competition Authority hav e to some extent agreed upon the magazines points of view.

Newspapers are completely rejecting the comparison, and point s to the fact that the press subsidies have been planned, discussed and evaluated by several commissions, while the importance of VAT have not been scrutinized at all.

Yet have not the members of the commission been appointed, and it is not known when their final report will be finished.

By Johann Roppen

Adviser by the Norwegian Media Ownership Authority