taxex Highlights

Why does the Press enjoy market reserve and pays no tax?

The scandal of special retirement pensions for journalists is a good reason for the press to analyze its privileges and help the country’s reorganization

At last, any scandal occurred within the press is widely covered by the press. The fraud and lack of right of 89 special retirement pensions requested by the Journalists Union of Rio de Janeiro, and the strike of the workers of Oil Companies, were widely covered by the media in May.

Both were published in the first page, including full page matters. Such an emphasis to these facts were excessive when compared with other facts much more relevant such the INSS scandal (Social Security) which did not receive such a coverage.

Although being exaggeration, it was a scandal and consequently it was news. The Union’s directors and their relatives, guided by president Paulo César Rodrigues, are being charged for forging professional registrations in order to receive special retirement pensions from the Social Security, claiming political prosecution during the period of militarism. Another contingent of journalists have not committed any fraud but are also claiming special pensions - monthly life indemnification - for prosecution and professional loss during the military dictatorship (1964-1980). The emphasis on the news about the pensions is meritorious, as a lack of corporative protection, considering that the press is criticizing its own acts - after criticizing, very hardly, other categories and groups, such as the politicians. However, the exaggeration suggests a revenge against a hostile Union. Globo was the newspaper which gave more coverage to the scandal of the journalists - their editor and some journalists are among the group requesting special pensions. From May 20, when the news were first published, till the end of the month, O Globo published 35 matters, five notes and one editorial in the first page, in addition to signed articles and notes in columns. The editorial in the first page (May 23) stated: "Considering such a fact an immorality, it is necessary to go ahead with the process in order to interrupt such immorality and assure that all the money which was misappropriated return to the public coffers". The editorial denied that "journalists were deprived of their jobs by imposition of the military dictatorship". However, an editorial by O Estado admitted (May 25): "By consulting the newspapers files, including the period of censorship, one can find a number of cases were journalists suffered professional prosecution which hurt their careers".

Américo Antunes, president of the National Federation of Journalists (FENAJ) was the person who denounced the pensions. However, FENAJ decided to defend the amnesty for those who were persecuted and offered its "unrestricted solidarity to journalists who have the right to receive the amnesty and/or special retirement pension". This declaration could be read, for example, in "Correio Braziliense". However, it was not published in "O GLobo".

The zealousness the newspaper demonstrated in relation to public coffers and its indignation in relation to frauds vanished when INSS (Social Security) sent a list including 62,284 names to the Federal Justice. The newspaper published the matter in one column, in May 24, but did not include even one of the names of the list. After three editions, "O Globo" published, in the first page, super-news about fraud and tax dodging: César Arrieta, the Argentine accused of being the leader of a gang which defrauded the Social Security in more than 3 billion dollars.

After registering the imprisonment "O Globo" forgot Arrieta. There was no suit, no follow-up of the inquiry, no interviews with agents or attorneys from the Social Security. Globo’s readers received no information about the gang, which pocketed 0.6% of the Gross National Product. The newspaper silenced even when Arrieta left the prison to testify, in June 2, in the 13rd Federal criminal court in Rio de Janeiro; not even one line was published in the edition the day after.

The news about journalists, however, continued plentiful and specious - so specious that it caused protests from those who know how to write and edit news. "The press commits, in a subject so close to its activities, the same prejudicial procedure manifested by other professional segments, by not discriminating who is who within this fact", wrote Eucimar de Oliveira, editor in chief of O Dia (he is not in the list). An outstanding name of the list, Zuenir Ventura, 64, 40 years experience in the profession, pattern maker, author of "1968 - The year which did not finish" took advantage of the fact to write the article "Loss and Damage", published by "Jornal do Brasil" in May 27, including some reflections about the methods of the press. "The power of press is arbitrary and its damages are irreparable" he declared. "The recantation never has the same force of the accusation. The justice has at least one code to define what crime is; in the press there are no rules , even to define news, or ethics" (we can apply this lesson to Globo’s lack of appetite in relation to Arrieta).
However, the outstanding point of Zuenir Ventura’s article was his proposal to expand the "ethical cruzade" to communication companies. "What about turning this cruzade upwards? I don’t know whether the actual ethical problems of the press are down here", he added. Following the same line, Artur da Távola, liberal senator and former journalist, made a speech in the Senate suggesting that such a fact should cause a reflection about the "ethical values of the class". Távola reminded the denouncing impulse of the press during the CPI (Parliamentary Inquiry Committee) about the Government Budget, and stated: At that time, the Congress executed a hard work, by analyzing themselves. Journalists could also do the same job". An abstract of Távola’s speech was published, in one column, by JB in May 31.

The media should help themselves and Brazil by applying their principles of severity in relation to the society, to their own activities. As a holder of privileges, the media should reject such privileges in order to demonstrate justness and real opposition to the robbery to which the taxpayers were submitted. The debate should begin with the ambiguity in the coverage of the revision of the constitution, presently in course. The press has been doing a campaign against subsidies, cheats, market reservation, but only a few know that the press takes advantages of these subjects. The revision represents the right moment to debate old concessions that media conglomerates should dispense. Some examples:
Tax Immunity - Art. 150 of the Constitution grants the most generous tax exemption to the press, church and book editors. In fact, it is not only exemption, it is immunity, in other words, the National Congress is not permitted to institute taxes on such services or institutions and their products. Beans are subjected to the payment of taxes, but newspapers are not. "Without considering other benefits resulting from the power of the press, they are exempted from the payment of ICMS (Goods and Service Tax) or ISS (Service Tax) on their activities, IPMF (Tax on Financial Transactions), tax immunity in relation to the IPI (Industrial products tax), and subsidy on the paper used in the newspapers. Thus, the State charges taxes on essential commodities, however, distributes these subsidies with no criteria. That’s a scandal", wrote jurist José Paulo Cavalcanti Filho, secretary in the Ministry of Justice during the government of President Sarney and coordinator of a project for a new law of the press.

There are suggestions for changes. Eduardo Jorge, deputy member of PT (Workers Party) who developed a project which is constantly commented in the press - a proposal of an amendment about the Social Security, is also the author of a project of revocation of this part of Art. 150 of the Constitution. The amendment was presented in 1993 and received minimum coverage of the press in May 19. "O Globo" published a note of one column and 19 lines with the following title : "Project altering tax exemption is criticized", and did not inform the readers about the reasons of the project. The day before, Jorge’s project was submitted to a public audience in the Congress and was "bombed" by conservative deputy Jarbas Lima and by the agent of ANJ (National Association of Journalists), Fernando Corrêa. A slightly larger note was published in "Diário do Comércio" of Belo Horizonte, informing that ANJ’s agent declared that journalistic companies pay taxes as any other company, and this is not true. The press even escaped from the IPMF (Tax on Financial Transactions), which "forked" the contractors and the masons.

While the amendment "slumbers" in the Congress, subsidies are on the path. Brazilian newspapers will import 400 thousand tons of paper this year, at an average of US$ 700 per ton, and will not pay even one cent of taxes. Even considering the subsidies, recent increase on the price of paper in the international market raised the prices of newspapers.

The cheapest, among the major ones, "O Estado" costs 66 cents. The most expansive, "Jornal do Brasil" costs One dollar and ten cents. "A Folha" and "O Globo" cost 90 cents. American newspapers, even receiving no subsidies, are cheaper. The most influent newspaper in the world, The New York Times, costs 60 cents. Its main competitor, The Washington Post, with annual expenses of US$ 100 million only for paper, costs 25 cents. Four copies of The Washington Post are equivalent to one copy of Jornal do Brasil. The purchase power is incomparable. The average salary in São Paulo, the country’s highest, according to Folha is US$ 605, while in the United States it is US$ 2,800.

It is necessary to point out that journalistic companies are not publishing houses with bad administration, with a fragile profile, to justify such a protection anymore. They represent profitable conglomerates which reached an income of US$ 6.6 billion with publicity last year. Abril group had presented an income of US$ 900 million in 94. O Estado presented gross income of US$ 212.9 million, paid 1% of that amount as income tax and distributed dividends of R$ 6 million to shareholders. Its more recent large investment is the purchase of Rockwell Gross printing equipment at a cost of US$ 32 million. So significant figures are not compatible with tax exemption and fiscal subsidies. And, even with the help of taxpayers, Brazilian newspapers are more expansive and present inferior graphical quality when compared with American newspapers. However, there is no competition.

Market Reservation - Le Monde, a major French newspaper, opened its capital and, immediately, La Stampa, from Italy (owned by Fiat), acquired 1.7% totaling US$ 2.9 million. Australian Rupert Murdoch built a media multinational: with companies in Australia, he controls one third of the English press and is building a TV network (Fox) in the United States, where he owns the tabloid New York Post. The Americans NY Times and Washington Post have investments in Europe. In Brazil, they cannot make investments.

The country has some foreign publications in technical areas (informatics is the best example), however, Brazilian press enjoys a market reservation which influences other sectors. Art. 222 of the Constitution has restricted the ownership of journalistic companies to Brazilians or naturalized foreigners for more than ten years. Foreign companies cannot have any participation, even minority, in the press. In case the revision which is in course be approved, international companies will be permitted to explore petroleum, administer telephones and mail, but Washington Post cannot have a newspaper in Brazil, neither a magazine, even of better quality or lower prices.

Loans and cheats - The law does not favor communication companies, but it is a fact that most companies obtain loans in public banks and are accused of failure to pay. In addition to the ethical aspect of companies responsible for the inspection of public sectors enriching with public resources, including the publicity of the government, the main aspect is the tolerance with the default. Jornal do Brasil and Manchete have debits with Banco do Brasil, and do not pay. Três Editorial (Isto É) owes 112 million dollars to Banco do Estado de São Paulo. Communication companies are responsible for a large percentage of the financial problems of the Social Security. According to a note published by Folha, 59 newspapers and 223 TV and radio stations are responsible for a failure to pay R$ 83 millions to the Social Security.

The list of bad debtors in the media is a secret very well kept, even more than the lists of bad debtors, who are not owners of media companies, referred as "tax dodgers" by the newspapers. The press is too important to such an evil reputation. As a business, the press should be in the same market it recommends to others.