Newspaper loses bid for tax exemption

December 05, 1992|By Jay Apperson | Jay Apperson,Staff Writer

The judge said his heart was with the Baltimore Chronicle i the community newspaper's fight against the big-city dailies and the state comptroller's office. The law, however, was not.

Accordingly, the ma-and-pa paper was turned down yesterday in its bid for an exemption from about $8,000 in back sales taxes, a tab that the paper's owners say could muffle the paper's alternative voice.

"I have to suppress my own ideas in making this ruling," Chief Judge Robert I. H. Hammerman said during a hearing yesterday in Baltimore Circuit Court.

The judge said alternative newspapers fill an increasingly important niche as dying dailies leave cities with only large newspapers, and he noted: "The evils that can arise because of monopolies or near-monopolies are frightening.

"But my job is not to give vent to my feelings or thoughts," the judge said. "My job is to interpret the law. I just think it is reaching too far to say this sales tax has a tendency to suppress speech."

And that's just what Larry Krause and Alice Cherbonnier, the Chronicle's husband-and-wife owners, had asserted. Schenley Press Inc., which owns the paper, was assessed about $8,000 in sales tax on four years' worth of purchases of printing materials, such as newsprint and ink.

The company argued that the tax burden could reduce the amount of money it spends to research stories. That, in turn, would force it to cut the number of columns devoted to news.

"The whole thing comes down to economics," Ms. Cherbonnier said. "We serve the wrong market for all the right reasons."

The 20-year-old free monthly paper has a distribution of 15,000 in neighborhoods from Ridgely's Delight to Pikesville. Its masthead reads: "The Baltimore Chronicle is dedicated to the proposition that people deserve better than they usually get."

At issue is a state law that had exempted newspapers from sales taxes. Until last summer, papers did not have to pay the tax on production materials, and customers did not have to pay sales tax at the store.

Although all newspapers are now subject to a sales tax, the Chronicle has argued that it should have enjoyed the exemption before the change in law. Further, Ms. Cherbonnier contends, it's still unfair that the free paper must pay tax on production materials.

But the comptroller's rules define a newspaper as a publication that comes out at least once a week. The Chronicle, not a newspaper in the comptroller's eyes, was told to pay up.

Enlisting the help of the American Civil Liberties Union, the paper appealed to a state administrative hearing officer and lost. It then appealed to state tax court and won.

The comptroller's office appealed that decision to the Circuit Court, where Judge Hammerman said the tax court had overstepped its bounds.

The lawyer for the paper, Jack L. B. Gohn, said an appeal would likely be filed.

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