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POLAND: Media protest against the planned ‘advertising tax’. This means bankruptcy for many media and limits to pluralism

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– Analysis by OKO press, published on 11 February 2021 on Rule of Law, accessible here.

Media in Poland protest against the planned ‘advertising tax’. This means bankruptcy for many media and limits to pluralism

‘Advertising ‘contributions’ will mean the weakening or even liquidation of some media operating in Poland,’ write media publishers in Poland in a letter to the authorities. The government wants to introduce a new levy under the pretext of fighting the Covid pandemic.

‘We are addressing the announced new, additional charge on media operating on the Polish market, misleadingly called a ‘contribution’, introduced under the pretext of Covid-19.

This is simply extortion, striking at the Polish viewer, listener, reader and Internet user, as well as Polish productions, culture, entertainment, sport and media’ – reads an open letter to the Polish authorities and leaders of the political groups.

It was signed by several dozen media titles (the list is being updated). The full text of the letter can be found here.

It is a protest against the so-called solidarity tax on media, which the United Right governing coalition wants to introduce.

Why the government wants to introduce the new levy precisely now? What the money obtained in this way should be used for? What threat this Act poses to the media?

A pool for the battle against the virus

A draft ‘Act on additional revenues of the National Health Fund, the National Fund for the Protection of Monuments and the establishment of a Fund for Supporting Culture and National Heritage in the Area of the Media’ prepared the Ministry of Finance was included in the list of legislative and programme work of the Council of Ministers at the beginning of February 2021.

This applies to a levy on revenues from advertisements published in the media. Where did the idea for such a levy come from? The government claims this is about the battle against the coronavirus.

The justification reads: ‘in view of the long-term consequences of the emergence and spread of the SARS CoV-2 virus and its impact on the health of the population, the legislator sees the need to introduce special solutions to facilitate measures to minimize its impact on public health’.

The government estimates that revenue from advertising in 2022 could amount to almost PLN 800 million (approx. 180 million euros) . The government wants to allocate this money to three funds:

  • 50% is to be allocated to the National Health Fund;
  • 35% is to be allocated to the Fund for Supporting Culture and National Heritage in the Area of the Media, which is yet to be established. As we read in the justification of the bill, the new fund is to be responsible, among other things, for ‘implementing projects intended to analyse content appearing in the media, especially digital content, promoting national heritage, cultural and sporting achievements and supporting media research’;
  • and 15% is to be allocated to the National Fund for the Protection of Monuments.

This is a government bill and reservations can be submitted up to 16 February.

The bill is supposed to come into force in July 2021.

Up to 15% of advertising revenues

The new levy will apply to both ‘conventional’ advertising, namely press, radio and TV advertising, as well as online advertising.

According to the bill, ‘media service providers, broadcasters, cinema operators, entities placing advertisements on an outdoor advertising medium and publishers generating advertising revenues’ of over PLN 1 million, will be obliged to pay the contribution. This threshold is 15 million for press publishers.

The levy will have different rates, ranging from 2% to as much as 15%. And therefore, for conventional advertising:

  • the media (except the press) will pay from 2% to 10%, depending on the advertising revenue they recorded in the given year;
  • for the press, the contribution will range from 2% to 6%.

However, the rates will be even higher for certain product groups. This applies to the so-called ‘qualified goods’, namely medicinal products, dietary supplements, medical devices and beverages with sweeteners. In this case, the premium will be from 4% to as much as 15%.

As for online advertising, the contribution is to be 5%. It would include ‘digital giants’ with global revenues of EUR 750 million and revenues in Poland of EUR 5 million.

Their own will not suffer, the others will be hit hard

Why did the ‘advertising tax’ electrify publishers so much and incite the protest? There are several reasons:

  • The law is due to come into force in July 2021, which is the time that the media are also painfully suffering the effects of the pandemic. According to the signatories of the letter to the authorities, the new levy could result in the weakening or even liquidation of some Polish media;
  • Although the government boasts that the Act will enable it to collect (whether it will actually collect is not so certain) money from the ‘digital giants’, in reality, according to the bill, it will amount to around 50–100 million zlotys. The rest of the estimated 800 million will be paid by the media;
  • The rates of the individual contributions are arbitrary; some media corporations in Poland will be hit harder by the new levy, others less.

Such action by the government primarily gives rise to suspicions that the true intention of the new act is to strike at and weaken the media in Poland. Selected media, of course. Although advertising premiums are to be paid by all publishers, the ruling camp can, after all compensate the loss to the media that are favourable to it.

For example, the pro-government ‘Gazeta Polska Codziennie’ in 2019 owed more than half of its advertising revenues to state-owned companies. In turn, in the period March–May 2020, at list prices, state-owned companies included in Kantar’s monitoring spent more than PLN 3.6 million on promotion in ‘GPC’, which was about PLN 1.6 million more than a year ago.

Translated by Roman Wojtasz for the Rule of Law in Poland and OKO.press. The article was published in Polish at OKO.press.