By Erica C. Barnett

State legislation requested by Attorney General Bob Ferguson would fully exempt newspapers and some online publications from the state business and occupation tax, saving eligible publications (and costing the state) a total of about $10 million over the next four years. The bill is sponsored by Sen. Mark Mullet (D-5, Issaquah) in the senate and Rep. Gerry Pollet (D-46, Seattle) in the house.

Newspapers already pay a reduced B&O tax rate, but online publications don’t count as newspapers (or publications, for that matter) under current state tax law. As a result, online outlets pay a higher tax rate than print newspapers like the Seattle Times; PubliCola, for example, pays the same B&O tax as any other “retailer,” even though our only product is free online content.

If the tax break for newspapers is allowed to elapse in 2024, as scheduled, their business and occupation taxes would increase around 40 percent—a significant hit for an industry that’s already struggling.

To prevent that, the legislation would exempt newspapers and “eligible digital publications”—those with at least two full-time employees, but no more than 50—from state B&O taxes through 2035.

In a committee hearing on the proposal Tuesday, Sen. Mullet said he’s found it alarming to watch the newspaper industry shrink over the years, but struck a note of caution about the impact of expanding the exemption too far.

“I think the attorney general, in their agency request, had a good idea to say, maybe we should think about how to get some of the electronic people in the preference as well,” Mullet said. “But I think it seems like based on the fiscal note, we have to work with [the state Department of Revenue] to kind of define that. We’re not trying to quadruple or quintuple the size of the preference here. We’re just trying to expand it to make sure it wasn’t just the traditional print papers but some of the other legitimate online newspaper publications as well.”

Most of the people who testified at Tuesday’s meeting were the publishers of small newspapers around the state, including the Mason County Journal, the Methow Valley News, and The Star newspaper from Grand Coulee Star.

Scott Hunter, the publisher of the Star, said that in the last 30 years, his paper has transformed from “a very robust newspaper” with multiple full-time reporters to a one-person operation in which Hunter does everything from photographing local basketball games to covering city council meetings, unpaid. “This bill… is not going to be a game changer for me,” Hunter said. “But it doesn’t make fundamental sense to tax something that you want to keep going, that is struggling, and is essential. It’s just fundamentally doesn’t make sense.”

PubliCola submitted testimony supporting the inclusion of small online publications in the bill, and asked legislators to eliminate the minimum publication size (two or more full-time employees) to reflect the fact that many small publications rely on freelancers rather than full-time staff reporters to fill their physical or virtual pages.