Texas House Speaker Predicts Newspaper Tax Will Be Spiked

By: (AP) A proposal to tax newspaper sales will likely be taken out of a massive tax restructuring bill, House Speaker Tom Craddick told news executives Monday.

Some newspaper officials had worried a tax on newspaper sales would hamper circulation and hurt business for contractors who deliver papers.

Currently, newspapers are exempt from the state sales tax. But the school property tax relief bill currently before the House would increase the state sales tax to 7.25 percent and would have expanded it to include newspapers.

The tax restructuring bill would replace a one-third reduction in school property taxes with about $10 billion from an array of taxes.

The House was expected to resume deliberations on the bill Monday. Craddick, a Republican from Midland, told the Texas Daily Newspaper Association he expects the House will remove the newspaper tax provision.

"I'm sure it will come out today," he told the group.

Rep. Charlie Geren, R-Fort Worth has introduced an amendment that would continue newspapers' exemption to the sales tax.

Publishers across the state worried that increasing the price of newspapers would cause circulation to drop. That would lead to revenue losses, they say, since newspaper advertising rates are based on paid circulation figures.