• by Erik Sass , Staff Writer, September 2, 2016

Not much is going their way nowadays, but newspapers may be getting a lucky break – in California at least.

The state is in the act of repealing a sales tax that was first foisted on newspaper publishers back in the fat days of the 1990s, providing a much-needed financial fillip as the industry continues its rocky transition to the digital age.

The sales tax is being withdrawn out of recognition that newspaper publishers now derive a growing proportion of their subscription revenues from sales of digital subs, even in cases where digital and print subs are bundled together.

Specifically, the tax authority ruled that at least 53% of the price paid for a bundled print and digital sub can be attributed to the digital access, allowing the subs to be categorized as primarily digital content, which isn’t taxable under the tax law passed in 1991.

The reduced sales tax on newspaper subscriptions, which amounts to a whopping $0.53 on each dollar of sales tax paid by newspaper publishers, takes effect October 1. A number of publications, including free newspapers and weekly publications, were exempt from the tax.

The tax on newsstand sales remains the same – but publishers of big metro dailies with large subscription bases should see a modest but much-needed bump to their bottom lines.

According to one estimate from the California Board of Equalization, the tax revenues returned to newspaper publishers will come to around $50 million a year. It’s worth noting that the same sales tax was repealed for bottled water and snack foods just a year after it was passed, in 1992.  Apparently, newspaper publishers didn’t have the political sway of junk food.

This rare win for the newspaper industry, which otherwise has received scant sympathy from state and federal regulators, follows a prolonged lobbying effort by publishers that petitioned the Board of Equalization, which oversees California’s taxes on goods including fuel, alcohol and tobacco.