What if final user is a parakeet?

• Position: Brief Article

Sometimes good law contradicts good sense. Take the General Assembly's repeal last year of free newspapers' exemption from sales tax on the ink and paper they buy and, when they contract it out, their printing.

Fair enough. Why should they get a break? Because their competitors do, says Sioux Watson, publisher of the Durham-based Independent Weekly. Newspapers with paid circulation don't pay tax on their ink, paper or printing. "That's where the big money is," she says.

The N.C. Revenue Department explains it this way: If you make people pay for your paper, the ink and paper are components of a product created for sale. If you don't, you're the final user -- and subject to sales tax.

Free weeklies have one of their own to blame for the predicament. The exemption was enacted in 1985 after The Village Advocate, a shopper then owned by Chapel Hill-based VilCom LLC, made an argument very much like the one Watson is making now -- it competes with dailies and should get the same treatment. Trouble is, "the law was written to describe just what The Village Advocate does," says Sabra Faires, the Revenue Department's assistant secretary for tax administration...