Bosnia and Herzegovina, Institucija Ombudsmana Federacije Bosne i Hercegovine
<base href="http://t3urednik.sigov.si/varuh-rs/typo3/" />
Bosnia and Herzegovina, Institucija Ombudsmana Federacije Bosne i Hercegovine
Public Media
TAX ON FREEDOM
The Federation Ombudsmen of B&H Vera Jovanović , Esad Muhibić and Branka Raguz prepared Special Report on Taxation of Daily and Weekly Papers and Negative Impact on Pluralistic Media Environment and Democratic Processes in the Federation of B&H. The Report is presented to highest officials of the both houses of the Parliament of the Federation of B&H, the Prime Minister Federation of B&H, Edhem Bičakčić, his Deputy, Dragan Čović, the OHR, the OSCE, and the IMC.
Since 26 September 2000, the date on which the Law on Changes and Modifications of the Law on Turnover Tax on Goods and Services came into force in the Federation, domestic publisher of daily and weekly papers are obligated to pay significantly increased taxes, which represents significant financial burden for media, and may endanger media freedoms, independent editorial policy of papers and their circulation.
Mentioned changes and modifications of the Law on Turnover Tax on Goods and Services adopted by the Parliament of the Federation of B&H in July of this year (the House of the Representatives on 26 July 2000 and the House of Peoples on 31 July 2000)
stipulate, among other things, increased turnover taxes on goods related to daily and weekly papers for 12 percent and increased turnover taxes on services from 10 to 12 percent, which applies to marketing services and distribution services (“Official Gazette of the Federation of B&H” no: 36/2000).
Before changes of the Law only publishers of weekly papers paid turnover tax on goods in amount of 10 percent. In practice mentioned tax was 9,0191 percent on retail price of weekly papers, and was paid through main distributor “Opresa”, or directly in case of autonomous or street distribution organized by publishers.
According to former legal provisions, publishers of daily papers did not pay tax on turnover goods. New turnover tax obligation on goods in amount of 12% (on each sold copy) represents therefore increased tax burden for all publishers of daily papers and increased tax burden for publishers of weekly papers as well.
Increment of turnover taxes on services (marketing and distribution) from 10 to 12 percent applies to all papers both daily and weekly papers.
Most of local publishers of papers suffer lack of finances, so new and increased taxes represent huge financial burden and, according to publishers, may endanger survival of publishing houses, as well as publishing of papers due to the fact that publishers are not in a possibility to pay mentioned taxes.
Ombuds-investigation
In their investigation the Federation Ombudsmen determined that - according to current number of copies printed - only for daily issue of the paper “Dnevni avaz” should pay turnover tax on goods in amount of 80.000 KM monthly (when weekly papers included it makes about 110.000 KM monthly), “Oslobođenje” daily 42.000 KM and “Večernje novine” 40.000 KM per month.
Even without newly introduced turnover tax on goods and increment of turnover tax on services most of publishers suffer operating losses and hardly make their business profitable. Most usually they make their business profitable due to the fact that they avoid other payable duties - payment of regular salaries to employees and journalists is sometimes late for couple of months. New tax obligations will make business operations of all media houses even more difficult, endanger standard of employees and even make issue of certain papers questionable. Final outcome of such situation could harm entire society because this situation could limit pluralism of printed media and impact of the public on democratic processes in the country.
To make things more controversial, at the same time imported papers and magazines are exempted from turnover tax on goods, the tax which is now imposed on local media, due to the fact that the Law on Changes and Modifications of the Law on Turnover Tax on Goods and Services adopted in October by both houses of the Parliament of the Federation stipulates (Article 19, paragraph 5) that turnover tax on goods shall not be paid on “circulation of imported goods that are exempted from duty…”. Since import of all printed or recorded materials is covered by the Law on Custom Policy, including papers from Croatia and Serbia written in languages quite similar to local language, it means that imported newspapers are exempted from taxation. Immediately upon coming into force of the Law all importers of papers from Croatia and Serbia requested exemption of previously paid tax, so today local publishers are in completely unequal position compared to importers.
What is background for introduction and increment of mentioned taxes imposed on local publishers of papers? In preparation of Draft Law, in the Government and Parliamentary procedure as well, representatives of the government (Prime Minister and Vice Prime Minister) repeatedly emphasized that proposals were prepared according to “pressure and interventions” of the International Monetary Fund and the World Bank. Vice Prime Minister, who is also Minister of Finances, particularly stressed that “the IMF explicitly demands appropriate incorporation of the segment concerning books, brochures, papers, etc. as you could here today” (tape recorded at extraordinary session of the House of Representatives of the Parliament of the Federation).
Indeed, amendments on tax legislation were initiated by the IMF and the World Bank. On 9 March 2000 the World Bank forwarded a letter to all representatives of the authorities in Bosnia and Herzegovina (received by all representatives of the Federation Parliament), which is in connection to “the second public finances structural adjustment credit (PFSAC II, 3258-BOS) - Tax Policy Reform”. In its letter the World Bank, among other things, requires the Entities to “harmonize turnover taxes through decrease of differences in taxation”. Neither daily nor weekly papers were mentioned in this letter, although some other products are mentioned (excise goods, food products, etc.).
Directly asked by the Institution of the ombudsmen, representatives of the IMF and the World bank said that they insisted exclusively on general principles of tax policy and limitation of tax exempted articles, and that “they never mentioned or requested” introduction of tax increment on press media.
Foreign practice
According to analysis prepared by European Press Council (EPC), value added tax (VAT or in local language PDV) varies from country to country, as well as from media to media, depending on nature of media.
In most of West European countries daily papers pay minimal VAT or do not pay it at all. The highest VAT is paid in Ireland (12,5%) and Austria (10%), then comes Germany (7%), Holland and Sweden (6%), Portugal (5%), Spain and Italy (4%)… while papers in Great Britain, Norway, Finland, Belgium, and Denmark do not pay VAT.
In all European countries, with exemption of Great Britain, VAT is paid by weekly or periodical papers or magazines in same percentage as is paid by daily papers. (Austria, Germany, France, Ireland, Italy, etc.).
In all mentioned countries, even where paid, VAT on papers is significantly lower than VAT on all other goods.
According to the same source of information (EPC), in its special report of 1993 European Parliament requested total exemption of books, papers and magazines from VAT obligation.
The European Commission repeatedly requested harmonization, if not abolition, of VAT in European Union member countries.
When in Summer of 2000 Polish Government and Parliament notified introduction of 7% VAT which is to be paid by local paper publishers from 1 January 2001 (publishers are currently exempted from paying VAT), International Federation of Paper Publishers forwarded strict protest to the authorities and requested change of mentioned decision. “Introduction of this tax”, they said, “will decrease circulation of papers and leads to catastrophic consequences on publishing industry in Poland”.
Financial situation of printed media is of so vital impact on democratic societies that in some European countries, when encountered to financial problems, there is traditional practice of donation or price supports of certain categories of papers in order to preserve these papers as participants in pluralistic media scene (support, for instance, provided to local or regional papers, etc.) without any conditioning that would influence editorial policy of such papers. Among other countries such support provided to pressed media exists in Austria, France, Norway, Sweden…
Recommendation by the Ombudsmen
Bearing in mind financial, political and social consequences of increased taxes and introduction of new taxes, which could lead to unpredictable consequences regarding media, as well as regarding ongoing democratic processes in the Federation of Bosnia and Herzegovina, the Federation Ombudsmen recommend the Government and the Parliament of the Federation following measures:
- total abolition of turnover tax on goods on daily papers;
- abolition or significant decrease of turnover tax on goods (up to 5 - 6%) on weekly and periodical papers and magazines.
Abolition and decrease of turnover tax on goods, which immediately impacts total circulation of papers, is of a vital importance for financial survival of pressed media and is of decisive importance for democratic processes in the Federation of Bosnia and Herzegovina. If they are not in position to contribute to development and strengthening of media immediately, democratic authorities at least should not act other way around.
Introduction of high taxes on pressed media, daily and weekly papers, represents serious negligence of messages and intentions contained in Article 10 of European Convention on Human Rights which guarantees right to freedom of expression and obligation of the authorities to create conditions for exercising right to receive and convey information and ideas.
Newsletter No. 23
Bosnia and Herzegovina, Institucija Ombudsmana Federacije Bosne i Hercegovine
Public Media
TAX ON FREEDOM
The Federation Ombudsmen of B&H Vera Jovanoviæ , Esad Muhibiæ and Branka Raguz prepared Special Report on Taxation of Daily and Weekly Papers and Negative Impact on Pluralistic Media Environment and Democratic Processes in the Federation of B&H. The Report is presented to highest officials of the both houses of the Parliament of the Federation of B&H, the Prime Minister Federation of B&H, Edhem Bičakčiæ, his Deputy, Dragan Čoviæ, the OHR, the OSCE, and the IMC.
Since 26 September 2000, the date on which the Law on Changes and Modifications of the Law on Turnover Tax on Goods and Services came into force in the Federation, domestic publisher of daily and weekly papers are obligated to pay significantly increased taxes, which represents significant financial burden for media, and may endanger media freedoms, independent editorial policy of papers and their circulation.
Mentioned changes and modifications of the Law on Turnover Tax on Goods and Services adopted by the Parliament of the Federation of B&H in July of this year (the House of the Representatives on 26 July 2000 and the House of Peoples on 31 July 2000)
stipulate, among other things, increased turnover taxes on goods related to daily and weekly papers for 12 percent and increased turnover taxes on services from 10 to 12 percent, which applies to marketing services and distribution services (“Official Gazette of the Federation of B&H” no: 36/2000).
Before changes of the Law only publishers of weekly papers paid turnover tax on goods in amount of 10 percent. In practice mentioned tax was 9,0191 percent on retail price of weekly papers, and was paid through main distributor “Opresa”, or directly in case of autonomous or street distribution organized by publishers.
According to former legal provisions, publishers of daily papers did not pay tax on turnover goods. New turnover tax obligation on goods in amount of 12% (on each sold copy) represents therefore increased tax burden for all publishers of daily papers and increased tax burden for publishers of weekly papers as well.
Increment of turnover taxes on services (marketing and distribution) from 10 to 12 percent applies to all papers both daily and weekly papers.
Most of local publishers of papers suffer lack of finances, so new and increased taxes represent huge financial burden and, according to publishers, may endanger survival of publishing houses, as well as publishing of papers due to the fact that publishers are not in a possibility to pay mentioned taxes.
Ombuds-investigation
In their investigation the Federation Ombudsmen determined that - according to current number of copies printed - only for daily issue of the paper “Dnevni avaz” should pay turnover tax on goods in amount of 80.000 KM monthly (when weekly papers included it makes about 110.000 KM monthly), “OsloboĂ°enje” daily 42.000 KM and “Večernje novine” 40.000 KM per month.
Even without newly introduced turnover tax on goods and increment of turnover tax on services most of publishers suffer operating losses and hardly make their business profitable. Most usually they make their business profitable due to the fact that they avoid other payable duties - payment of regular salaries to employees and journalists is sometimes late for couple of months. New tax obligations will make business operations of all media houses even more difficult, endanger standard of employees and even make issue of certain papers questionable. Final outcome of such situation could harm entire society because this situation could limit pluralism of printed media and impact of the public on democratic processes in the country.
To make things more controversial, at the same time imported papers and magazines are exempted from turnover tax on goods, the tax which is now imposed on local media, due to the fact that the Law on Changes and Modifications of the Law on Turnover Tax on Goods and Services adopted in October by both houses of the Parliament of the Federation stipulates (Article 19, paragraph 5) that turnover tax on goods shall not be paid on “circulation of imported goods that are exempted from duty…”. Since import of all printed or recorded materials is covered by the Law on Custom Policy, including papers from Croatia and Serbia written in languages quite similar to local language, it means that imported newspapers are exempted from taxation. Immediately upon coming into force of the Law all importers of papers from Croatia and Serbia requested exemption of previously paid tax, so today local publishers are in completely unequal position compared to importers.
What is background for introduction and increment of mentioned taxes imposed on local publishers of papers? In preparation of Draft Law, in the Government and Parliamentary procedure as well, representatives of the government (Prime Minister and Vice Prime Minister) repeatedly emphasized that proposals were prepared according to “pressure and interventions” of the International Monetary Fund and the World Bank. Vice Prime Minister, who is also Minister of Finances, particularly stressed that “the IMF explicitly demands appropriate incorporation of the segment concerning books, brochures, papers, etc. as you could here today” (tape recorded at extraordinary session of the House of Representatives of the Parliament of the Federation).
Indeed, amendments on tax legislation were initiated by the IMF and the World Bank. On 9 March 2000 the World Bank forwarded a letter to all representatives of the authorities in Bosnia and Herzegovina (received by all representatives of the Federation Parliament), which is in connection to “the second public finances structural adjustment credit (PFSAC II, 3258-BOS) - Tax Policy Reform”. In its letter the World Bank, among other things, requires the Entities to “harmonize turnover taxes through decrease of differences in taxation”. Neither daily nor weekly papers were mentioned in this letter, although some other products are mentioned (excise goods, food products, etc.).
Directly asked by the Institution of the ombudsmen, representatives of the IMF and the World bank said that they insisted exclusively on general principles of tax policy and limitation of tax exempted articles, and that “they never mentioned or requested” introduction of tax increment on press media.
Foreign practice
According to analysis prepared by European Press Council (EPC), value added tax (VAT or in local language PDV) varies from country to country, as well as from media to media, depending on nature of media.
In most of West European countries daily papers pay minimal VAT or do not pay it at all. The highest VAT is paid in Ireland (12,5%) and Austria (10%), then comes Germany (7%), Holland and Sweden (6%), Portugal (5%), Spain and Italy (4%)… while papers in Great Britain, Norway, Finland, Belgium, and Denmark do not pay VAT.
In all European countries, with exemption of Great Britain, VAT is paid by weekly or periodical papers or magazines in same percentage as is paid by daily papers. (Austria, Germany, France, Ireland, Italy, etc.).
In all mentioned countries, even where paid, VAT on papers is significantly lower than VAT on all other goods.
According to the same source of information (EPC), in its special report of 1993 European Parliament requested total exemption of books, papers and magazines from VAT obligation.
The European Commission repeatedly requested harmonization, if not abolition, of VAT in European Union member countries.
When in Summer of 2000 Polish Government and Parliament notified introduction of 7% VAT which is to be paid by local paper publishers from 1 January 2001 (publishers are currently exempted from paying VAT), International Federation of Paper Publishers forwarded strict protest to the authorities and requested change of mentioned decision. “Introduction of this tax”, they said, “will decrease circulation of papers and leads to catastrophic consequences on publishing industry in Poland”.
Financial situation of printed media is of so vital impact on democratic societies that in some European countries, when encountered to financial problems, there is traditional practice of donation or price supports of certain categories of papers in order to preserve these papers as participants in pluralistic media scene (support, for instance, provided to local or regional papers, etc.) without any conditioning that would influence editorial policy of such papers. Among other countries such support provided to pressed media exists in Austria, France, Norway, Sweden…
Recommendation by the Ombudsmen
Bearing in mind financial, political and social consequences of increased taxes and introduction of new taxes, which could lead to unpredictable consequences regarding media, as well as regarding ongoing democratic processes in the Federation of Bosnia and Herzegovina, the Federation Ombudsmen recommend the Government and the Parliament of the Federation following measures:
- total abolition of turnover tax on goods on daily papers;
- abolition or significant decrease of turnover tax on goods (up to 5 - 6%) on weekly and periodical papers and magazines.
Abolition and decrease of turnover tax on goods, which immediately impacts total circulation of papers, is of a vital importance for financial survival of pressed media and is of decisive importance for democratic processes in the Federation of Bosnia and Herzegovina. If they are not in position to contribute to development and strengthening of media immediately, democratic authorities at least should not act other way around.
Introduction of high taxes on pressed media, daily and weekly papers, represents serious negligence of messages and intentions contained in Article 10 of European Convention on Human Rights which guarantees right to freedom of expression and obligation of the authorities to create conditions for exercising right to receive and convey information and ideas.
