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The Council of Ministers updated its list of proposed legislation scheduled for consideration in the following weeks to include a new draft bill. The title: “Act to provide additional revenue for the National Health Fund, the National Historic Landmark Protection Fund, and for the establishment of a National Media Culture and Heritage Support Fund”.
While the project’s title suggests that it intends to inject additional cash into, among others, the national health care system, reappropriating funds means that the government will have to either cut spending in other areas or raise taxes.
Different tax rates for different media outlets
Following a series of leaks and early media reports, the government has finally revealed the details of its new tax proposal. Under the new legislation, media outlets would have to pay a tax on their advertising revenue. The rates vary depending on the type and size of a given media outlet, but also on the amount of income from ads and even the type of advertised goods. Higher rates will be imposed on revenues from advertisements of goods considered to be harmful to health. As examples of the latter, in its official communique, the Ministry of Finance mentions products such as sugary drinks and... dietary supplements.
How does the Ministry justify the new budget measure? It argues that similar solutions are already in force in other countries, and points to the financial burden caused by the pandemic.
- Having in mind the long-term consequences of the emergence and spread of the SARS CoV-2 virus and its impact on public health, the legislator sees the need for specific solutions that would facilitate measures to minimize its negative effects- the authors write in the justification for the bill.
The draft itself also includes detailed information on the distribution of raised funds. As much as 50% of all contributions will go to the National Health Fund. The rest will be divided between the National Media Culture and Heritage Support Fund (35%) and the National Historic Landmark Protection Fund (15%).
The media sector feels threatened
The project now enters its pre-consultation phase. Comments and remarks can be submitted until February 16. The government can certainly expect a lot of them, considering that the rumors surrounding the introduction of a new media tax plans caused a stir in the advertising industry, which suffered considerable losses during the pandemic.
-It's a way to impose economic pressure on independent media in Poland. The idea is to reduce their value by draining their revenues. The tax will place an undue financial burden on media outlets and lower their market valuation. Financially weakened outlets will be an easy target for state-controlled companies. It resembles a perpetual motion device - private media outlets will be taken over with the same money they paid the state in taxes - Jakub Bierzyński, founder and CEO of OMD media, said before the official publication of the draft bill.
-Even if the legislator’s declared intention is to primarily tax global corporations, the new measures will also affect domestic media outlets, which, like all other businesses, are struggling financially in the face of a pandemic. This will only worsen their market position, given that real competition between Polish outlets and global media corporations can even exist in the first place. To save their financial liquidity in the face of this new tax, media outlets will be forced to raise prices for advertisers, while the advertisers will have to raise prices for customers. Ultimately, every single family in Poland will have to pay for it, which in the context of the economic downturn and concerns about job security imposes yet another financial burden on each and every one of us – comments Włodzimierz Schmidt, president of the Association of Internet Industry Employers IAB Poland.
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