THE removal of VAT on Irish newspapers and a corresponding cut in the cover price are among the main recommendations in a wide-ranging report on the newspaper industry.
The report also recommends the introduction of an ombudsman to deal with readers' complaints and changes in libel laws to make it easier to publish news about controversial issues.
The report of the Commission on the Newspaper Industry, set up by the Government, has just been completed after nine months. It identifies UK newspapers as an increasingly serious threat to the Irish industry and says they have engaged in below-cost selling, which must be banned.
The report says VAT, currently levied at 12.5 per cent, should be quickly removed. If this is done there will be a corresponding reduction in the price of newspapers.
The recommendation on VAT will be welcomed by the industry which has been pressing for such a move for years. However, Government sources said last night a "cast-iron guarantee would have to be given on newspaper price cuts.
VAT on newspapers currently nets the Exchequer about £23 million per annum.
The commission also says Irish newspapers will always face stiff competition from UK papers because the latter enjoy greater economies of scale. To develop a strong, vibrant industry, major changes in work practices will have to be undertaken involving state-of-the-art technologies and reduced labour costs.
The commission also examined media ownership and concluded there was no grounds for State intervention on the basis of undue concentration.
The commission was established by the Minister for Enterprise and Employment, Mr Richard Bruton, following the collapse of Irish Press Newspapers.