Prague, 6 November 1997 (RFE/RL) -- U.S. Supreme Court decisions about newspaper taxes during the past 60 years suggest that a proposed Value-Added Tax (VAT) in Slovakia would be struck down as illegal if officials tried to impose such measures in the United States.
That's because in the United States, the constitution guarantees that the press shall be free from unfair and discriminatory taxes that have an impact upon circulation or distribution.
The Slovak parliament is scheduled next Tuesday to debate whether to quadruple the VAT for certain newspapers and magazines. News organizations and opposition politicians say the bill is a transparent scheme to stop criticism against Prime Minister Vladimir Meciar's government.
The bill calls for an increase in VAT taxes from six percent to 23 percent for publications whose advertising content and, in the words of the bill, "erotic and pornographic" content exceeds 10 percent of total content.
The controversy in Slovakia has striking similarities to a 61-year-old Supreme Court case involving Huey P. Long, a U.S. senator from the state of Louisiana.
During the 1920s and early 1930s Long was, by most accounts, a demagogue in Louisiana. Historians say that by 1934, Long held his state in a virtual dictatorship -- controlling the legislature and the state house and exercising deep control over the state courts. In 1934, the senator's allies became annoyed at the frequent attacks against Huey Long and his political machine by a group of widely-circulated newspapers.
State lawmakers responded to the editorial criticisms by enacting a special two percent tax on the gross advertising revenues of newspapers with circulations of more than 20,000. Of the 163 newspapers in the state, only 13 had more than 20,000 subscribers and 12 of those were outspoken critics of Long.
The newspapers went to court and argued that the tax was a form of censorship. The Supreme Court ruled in favor of the newspapers in a decision known in the history books as "Grosjean versus American Press Co., 1936."
The decision does not mean that newspapers in the United States are immune from ordinary taxes. The Supreme Court in 1953 refused to hear an appeal on a California decision that affirmed the legality of a general business tax on newspapers. In that case, a newspaper in Corona, California had refused to pay a $32 municipal tax that had been levied equally against all businesses in the town. But California's highest court said the newspaper failed to show that the amount of the tax was harsh or arbitrary, that the tax was oppressive or confiscatory, or that the tax in any way curtailed or abridged the publication's right to disseminate news and commentary. Legal experts say the refusal of the U.S. Supreme Court to review the California ruling signaled its agreement with the decision.
Still, the Supreme Court in 1983 did rule on a case about a tax on paper and ink that was levied against a handful of newspapers in the state of Minnesota. Justice Sandra Day O'Connor, who still sits on the U.S. Supreme Court today, wrote that a "special tax that applies only to certain publications" is prohibited by the First Amendment. She wrote: "A power to tax differentially, as opposed to a power to tax generally, gives a government a powerful weapon against the taxpayer selected." O'Connor continued: "We think that recognizing a power in the State not only to single out the press but also to tailor the tax so it singles out a few members of the press presents such a potential for abuse that no interest suggested by Minnesota can justify the scheme." (Minneapolis Star v. Minnesota Commissioner of Revenue, 1983).
Since that decision, other U.S. Supreme Court rulings have further defined "discriminatory taxes" as those applied solely on the basis of a publication's content. (Arkansas Writers' Project v. Ragland, 1987; Texas Monthly Inc. v. Bullock, 1989).
The basic rule in the United States regarding taxes on the press is this: Newspapers, broadcasting stations, and other mass media must pay the same taxes as any other business. Taxes that are levied only against the press and inhibit circulation or impose other kinds of prior restraints are unconstitutional. This includes very high taxes that keep all but very wealthy people from publishing newspapers. Finally, decisions by the government to tax or not tax cannot be based solely on the content of the publication.
