Land of Lincoln Takes Ax to Press Tax

By: Jim Rosenberg As of Sept. 1, printers throughout Illinois will no longer be assessed sales tax on the purchase of presses and related equipment. And it may not be too late for the Chicago Tribune's big color tower purchase. The printing equipment tax was erased late last month with the passage of Illinois' $45.5 billion budget.

Don Gustafson, president of The Tensor Group, in Woodridge, near Chicago, said he was among the equipment makers and printers who wrote their local legislators seeking an end to the new tax. Some printers had seriously considered moving their plants to neighboring states, according to Gustafson.

Illinois made sellers responsible for paying the state any taxes due on sales. So sales tax is a line item on a sales contract. Companies in or outside Illinois who sold to Illinois customers were expected to pay the tax on each sale directly to the state. "To my knowledge, the state of California is the only [other] one that's had that," said Gustafson.

The sales tax was applied to presses exactly one year ago following legislation that was little-noticed at the time, according to Gustafson. Sales tax of not less than 6%, and exceeding 8% in parts of Cook County, can add considerable cost to equipment that typically sells for anywhere from tens of thousands to tens of millions of dollars. "For Illinois printers, it's a significant change," said Gustafson.

Probably the largest recent newspaper press order in the state are the tower additions that the Chicago Tribune is buying from MAN Roland (E&P Online, April 29). The project was announced at about the same time that a bill to restore the press exemption was introduced in early spring by Rep. Tom Cross (whose district includes Plainfield, site of a large newspaper printing plant built by Copley Press Inc. before the papers printed there were sold to Hollinger International).

Tribune executives would not disclose the cost of the added iron, but it is extensive: an eight-couple tower to be added to each end of nine press lines -- together, bigger than most individual new-press sales.

"Our project will qualify under the exemption," Richard Malone told E&P. Tribune's Senior Vice President and General Manager explained that the newspaper has made a down payment but has not yet received any equipment.

"We're still working it through our tax guys to figure it out," Malone said. "We know that some of it will qualify; we're just not sure yet how much."

Illinois is home to more than 2,900 printers, according to Crain's Chicago Buisness. The state has more than five dozen dailies and hundreds of weeklies, though not all do their own printing, while others print their own publications as well as commercial work.

Besides Tensor, the state is home to some of the largest makers of newspaper presses. The headquarters of Goss International Corp., the U.S. subsidiary of Germany's MAN Roland Druckmaschinen, and the U.S. offices of Japan's Mitsubishi Lithographic Presses are all near Chicago. Press ancillaries supplier Jardis Industries is in Itasca. Defunct Publishers Equipment Corp.'s factory was in Rockford and an early agent for TKS, Taft Equipment Sales Co., was based in Chicago.