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Daunt attacks 'Luxembourg problem'
19.12.11 | Bookseller Staff
Waterstone's m.d. James Daunt has called for the government to intervene over tax rates, criticising the advantages enjoyed by businesses which trade from Luxembourg, as Amazon does, in an interview with the Financial Times.
When asked by the FT if the government could do anything to aid the book trade, Daunt said: "The only thing that could be done and I think should be done is that the 'Luxembourg problem' shouldn't exist. I find it peculiar that the government taxes us on the high street heavily through the business rates when our major competitor, which is obviously the internet, is not taxed at all and in fact runs itself in an aggressively tax-efficient manner."
Last week Luxembourg said it would lower the VAT rate on e-books to 3% in a move that could give Amazon a further competitive advantage to UK based e-booksellers, which must charge the UK rate of 20%. James Daunt, m.d of Waterstone's, told The Bookseller: "We would prefer VAT to be lower or zero-rated for e-books but believe it is wrong to exploit loopholes such as this. It is confusing for the consumer and takes money out of the UK tax system, which I cannot believe is in the best interests of the trade or the indeed the country.”
In the FT interview, Daunt also talked about the problem of "showrooming", when customers browse in Waterstone's but buy the book at a lower price through other retailers online. He said: "You can do it with every single product you buy, just about. It undoubtedly happens in books. So how do you win the loyalty and trust and acceptance of your customers so that they limit the degree to which they do that? I think that's probably what we don't have at the moment. We certainly don't have enough of it."
On the stocking of Waterstone's, Daunt reiterated the need for a local offer. "Clearly we want a different offer in Romford to Islington. I would expect on Upper Street [in Islington] on a Saturday for a significant number of people to be reading your paper and coming in and buying the books you review. I suspect fewer are walking down Romford High Street thinking: 'Oh, the new Norman Davies looks really interesting,'" he said.