Magazines win subscription sales tax battle - Pennsylvania - Brief Article

Folio: The Magazine for Magazine Management, Sept 1, 1994 by Amy Zuber

The magazine industry won a round in the fight against sales taxes when the Commonwealth of Pennsylvania repealed its 6 percent tax on magazine subscriptions in June after passing a new budget.

The move ended a three-year battle that erupted when the Keystone State passed a tax on newsstand and subscription sales for magazines in 1991. Publishers such as Rodale Press, Cowles Magazines and TV Guide argued that the tax was discriminatory and unconstitutional. They were particularly upset that the tax was levied on subscribers of magazines published in-state, while newspaper readers and subscribers of magazines based out-of-state were exempt.

"The state was bringing in very little in tax revenue, but causing a lot of problems," says Robert Martin, corporate projects manager for Rodale. "We think there are some things [the government] should be promoting - and one of them is an informed public."

"The repeal does not remove the newsstand tax on magazine sales. In that regard, the publishers are still awaiting a ruling from the Pennsylvania Supreme Court on a lawsuit filed against the state "on the grounds that it is unconstitutional to differentiate between magazines and newspapers only on the basis of content. " In a 1990 case decided in Florida, the high court there chose to address a similar imbalance by levying a newsstand tax on newspapers rather than making magazines exempt.

The Pennsylvania tax had become a consideration for those publishers thinking about moving their businesses. Grit, an upbeat journal aimed at America's heartland, left Williamsport in late 1992 after 110 years and headed to Topeka, Kansas, the home of parent company Stauffer Communications. Donald Keating, general manager of Stauffer Magazine Group, says the tax had only a minor impact on the decision, but it did make the financial benefit of relocating out-of-state more attractive.

TV Guide still mulling move

The repeal of the tax could play a much bigger role in keeping TV Guide in state. The magazine, which employs more than 800 people in its corporate headquarters in Radnor, is in the process of weighing whether or not to renew its lease, which expires in the spring of 1995. "The fact that the tax has been repealed makes it much more comfortable for TV Guide to stay in the Philadelphia area," says spokeswoman Rachel Breinin. "We are very pleased."