Obama told PM to shelve magazine tax

Announcement that Obama brought up the tax on non-EU magazines comes after tax minister said plan had been shelved to allow time for a study of its legality to be carried out

US President Barack Obama asked PM Helle Thorning-Schmidt to ditch the controversial decision to charge VAT on magazines printed outside the EU.

“It’s an issue that has been discussed not only at home but also to a great extent by the Americans,” Thorning-Schmidt said when she was asked about the tax in parliament today. ”For that reason the president brought up the issue with me during the meeting.”

During their meeting at the White House on Friday, Obama took the initiative to discuss the tax, which would increase the price of a 30 kroner magazine published outside the EU to about 200 kroner.

By Monday the tax minister, Thor Möger Pedersen, made the surprise announcement that the tax would be “postponed”.

Pedersen justified pushing back the tax's April 1 implementation by saying that it was necessary to investigate whether if it would break an international convention guaranteeing the free movement of educational, scientific and cultural material.

The tax has been criticised for its potential impact on foreign magazine subscriptions in Denmark, as well as the potential impact it would have on US printers if other European countries followed suit.

In a letter send to Obama prior to his meeting with Thorning-Schmidt, American congresswoman Shelley Moore Capito asked the president to bring up the issue.

Congresswoman Capito represents a district in the state of West Virginia, one of the locations that magazine National Geographic is printed. The magazine's publishers have already submitted a formal complaint to the European Commission over the government’s plans.

By implementing the law, the government wants to close a tax loophole allowing magazines printed outside of the EU to avoid paying VAT. That, according to the law's proponents, encourages Danish publishers to print abroad instead of in Denmark or the EU.

By placing VAT on foreign magazines, it is hoped publishers will return printing operations to Denmark. But the postal service, Post Danmark, has said that it would be very expensive to sort all nine million magazines arriving in Denmark.

The result would be a 160 kroner levy per issue of a non-EU magazine in order for the government to claim an extra 7.5 kroner from a 30 kroner magazine.

Opposition party Venstre is now calling for an investigation into whether it actually was Obama who changed the government’s position.

“We need this situation to be clarified,” Venstre tax spokesperson Torsten Schack Pedersen told jp.dk. “We need to know whether it was because of American jobs, the EU court or whether the government simply saw common sense.”

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