New tax on subscriptions hits Finnish printed press sector


Over a hundred media employees have lost their jobs as a result of the new tax on newspaper and magazine subscriptions implemented by the Finnish government. Layoff negotiations are currently under way for another 200 professionals.

“Is the press really the thing that improves democracy?”

These are the words used last November by the Finnish politician Kimmo Sasi to plead in favour of a new value added tax on newspaper and magazine subscriptions in Finland. “The members of the press tend to be a bit arrogant. They think: “We can write whatever we want about politicians, and they will have to dance to our music. Luckily the majority of the Parliament is not going to accept this.”

Two days later, the Finnish Parliament passed the tax proposal.

By that time, a number of media corporations had already started negotiating layoffs. “The same thing happened in 2009, when 500 jobs were lost,” commented Petri Savolainen, director of the Finnish Union of Journalists. “It’s rather typical that, just like last time, real financial imperatives for layoffs are almost non-existent,” he said. “Most of these papers are financially stable and successful.”

Revenge against the media?

The 9 percent tax on newspaper and magazine subscriptions took the media industry by surprise.

The law was very quickly put together by the government and presented to the Parliament. It became valid at the beginning of the year 2012. Prior to that, the printed press sector had been subjected to a 23 percent tax on advertisement and single copy selling, but was not taxed on subscriptions.

Savolainen acknowledged that the tax is affecting journalists in Finland, as most of the layoff negotiations have been justified by the new measure. “If the tax is truly forcing newspapers to cut down on staff, how are they going to make better quality with less journalists and busier days?”, he asked.

This is a fair question to be raised, especially considering the fact that in his speech in Parliament, Kimmo Sasi implied that the Finnish press suffers from poor quality. He compared Helsingin Sanomat, the biggest daily paper in Finland, to the British Financial Times, stating that the latter was much superior. Sasi also said that regional papers in particular lacked journalistic quality and did not exercise “such a big influence on democracy.”

Helsingin Sanomat is the largest Finnish daily newspaper. Photo credit: Samikki, via Flickr (some rights reserved)

Sasi’s comments came as a slap for Finnish journalists and unleashed speculations that the new tax was a revenge against the media; over the past few years, a number of politicians have been the subjects of thorough investigations in the media, prompted by allegations of illegal campaign funding practices and corruption. The funding scandal started in 2008, when it was revealed that some members of Parliament had kept secret some of their campaign donators and their meetings with them. Corruption reports continued until 2010 and eventually led to the resignation of Prime Minister Matti Vanhanen.

In an interview given to the Finnish Union of Journalists’ publication Journalisti, Kimmo Sasi tried to soften and clarify his earlier statements in Parliament. He explained that he had mentioned the Financial Times because of its high quality journalism and wished that Finnish papers could “learn something from the example” and improve their standards.

Sasi also reversed his comments on local papers.

“The importance of local papers to local democracy is very big. What I said before was incorrect,” he said. He also admitted that when newspapers lose subscribers and sources of income, it is more difficult for them to produce quality journalism.

Finnish politician Kimmo Sasi: “Is the press really the thing that improves democracy?”. Photo credit: wikipedia

The new taxation mostly affects small, local papers, which have already been struggling because of the global economic crisis.

“This tax is a financial challenge, through the readers, for the papers. Even if employees need to be laid-off, the papers still need to find a way to produce quality journalism,” says Jukka Holmberg, director of the Union of Newspapers.

Holmberg does not think, however, that regional papers will find themselves under threat of closure: “I don’t believe that regional papers are dying. In the long run the tax might be a threat only to small, financially unstable local papers.”

Former editor-in-chief of the Aamulehti daily newspaper, Matti Apunen, said in an interview with the weekly magazine Suomen Kuvalehti, that the government clearly did not have enough information about the role of the media. According to him, if local papers did not monitor local politics, nobody would.

“If regional papers lose circulation on municipal border areas, their whole nature will change. They will become more like city papers. The gap between cities and countryside might deepen.”

What is at stake?

In the global crisis context, the Finnish government has been forced to devise ways to raise its income and cut on expenses. Originally the government declared that the new tax would help to increase its income by EUR 90 million. The newspaper industry, however, says that the government’s calculation is incorrect, because it is based on current subscription numbers. It is to be expected that the tax will raise newspaper prices and result in a decrease of subscribers.

The Finnish Union of Journalists criticised media businesses for starting to plan lay-offs even before the tax had been approved. Mostly employees were offered various forms of retirement and resignation packages.

The quality of Finnish papers is of great importance to the Union of Journalists, as well as to the Union of Newspapers. After Kimmo Sasi made his notorious speech in Parliament, the Union of Newspapers issued an official response: “It is always a threat to freedom of speech, if the working conditions of papers are weakened when their content doesn’t please policymakers,” Jukka Holmberg said.

Despite criticising the way and the reason why the tax was established, Holmberg welcomed a healthy dialogue about Finnish journalism.

“I believe the quality of Finnish papers and their role in producing national, regional and local information, and in acting as an open forum, can withstand criticism and international comparison,” he said. “This is a discussion we are happy to engage in.”


Author’s comment:

Quality journalism must be safeguarded

What is the purpose of media? Where is journalism going? Is it just about money? These are few of the questions that were asked after the new press tax was passed in Finland.

Money is of course important. A newspaper is a business. It has to be profitable. This is the only way the printed press can continue to exist. But should quality not matter? Should the rights of media employees not matter?

I find it slightly confusing that a company such as Otavamedia laid 44 people off and subsequently offered them part-time contracts. It looks as if they are planning to use the same people for the same work but for less cost. I believe that the right to a solid paycheck for media professionals is just as important as the quality of journalism itself.

Kimmo Sasi made one good point in his speech: there is room for improvement in Finnish journalism. Working conditions have declined, making it impossible for Finnish newspapers to compete with papers such as the Financial Times.

As far as local papers are concerned, their significance to local politics is undeniable. National media outlets rarely have the space or interest to cover local politics, especially in smaller cities and towns.  Important decisions are made in local politics. In a democracy, citizens deserve to be well informed and politicians must be held accountable.

Employees treated rightly are happy and motivated, and motivated staff produces quality work. This is an equation that benefits everyone.

Further reading:
Finnish Political party newspapers in big squeeze, 18 January 2012