Monday, 29 July 2013

Should we end the subsidy of newspapers?


OK I hear you - what subsidy? There is no subsidy of newspapers and nor should their be.  Except that some people believe that newspapers (and books, and children's shoes and jaffa cakes) are subsidised:

Dwarfing this is an estimated £4bn p/a subsidy on the direct consumption of petrol, gas and coal through a reduction in VAT from 20% to 5%.

Yes I know, this author - drawing on a piece of egregious research from some folk called Oxford Energy Associates - is talking about domestic fuel. But I guess that is no different from the zero rating of food, publishing and children's clothing?

The truth is that this argument - used again and again by green sorts to excuse the actual subsidy of renewable energy - is a load of old cobblers. A subsidy is where I give you money to reduce your costs not where I reduce your (and lots of other businesses') rate of taxation.  Unless, of course, that rate of tax is set to be negative when it is a subsidy.

We do not subsidise fossil fuels not even a little bit. We give producers tax breaks on exploration and development just as we give pharmaceuticals businesses tax breaks on R&D and manufacturers tax breaks on investing in new plant. And these aren't subsidies either. Neither is a hypothetical (and doubtful) estimate of the externalities related to carbon dioxide emissions. These may well be such externalities but their existence is not a subsidy.

If we're to have a debate about whether energy should be subsidised (it shouldn't be) let's have that debate about the actual subsidies rather than some make-believe ones dreamt up by people with a direct vested interest in the continuing subsidy of renewable energy and the promotion of a particular policy response to climate change.


1 comment:

Anonymous said...

I thought you were going to blog about the £70 million pa that Councils spend on regulatory notices in local newspapers as a legal requirement in the UK. Now that is a subsidy!