News

Trade fears over VAT threat from 'emergency budget'

22.06.10 | Philip Jones

The book trade faces a nervous wait today amid speculation that VAT could be imposed on books in the 'emergency budget'. Before the General Election the Tories said they would not apply VAT to books, but some publisher sources said there was now a "40/60" chance of the tax being levied on books, as part of a raft of measures being outlined today at 12.30 by chancellor of the Exchequer George Osborne.

Printed books are currently zero-rated, though digital and audio books attract the full rate of VAT of 17.5%.

However, with the top rate of VAT expected to rise today, some retailers have been calling for the tax to be imposed on zero-rated goods, such as food, books, newspapers, magazines and children's clothing, as an alternative. One option would be to impose the low-rate of VAT (currently 5%) on all books, including digital and audio texts; though publishers fear that any imposition of tax could push up book prices, and reduce demand at a time when book sales are already down.

Tim Godfray, chief executive of the Booksellers Association, said that the BA had been working "closely" with the Publishers Association "to anticipate and plan for any measures that could be applied to books and their related businesses" in today's budget, though he would not be drawn on what plans were in place should a tax be mooted for books. In the past the BA has been at the forefront of campaigning against VAT on books.

In a straw poll taken by The Bookseller before the General Election, keeping VAT off books was cited most frequently as a key trade issue, closely followed by removing VAT from e-books.

At the time, then-shadow culture minister Ed Vaizey told The Bookseller: "We have absolutely no plans to put VAT on books. I know that VAT on e-books is an issue for the industry and one that we will look at after the election."

It is not the first time the trade has faced the prospect of a tax being levied on books. In the early 1990s the business successfully campaigned against Tory efforts to extend VAT onto books, having earlier fought off a European Economic Community plan to harmonize VAT across Europe, which could have included removing the zero-rating on books. And in the 1940s the then Chancellor Kingsley Wood attempted to bring in a 'tax on publications'. It was thrown out of Parliament as a "barbarous thing".

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By AN Bookseller

What I find alarming Mark is how much better we all were at holding the line even as recently as 15 years ago, when a very clear message was very quickly put forward and then rammed home. Has so much been forgotten since those campaigns? It does feel like we are in very different territory in how we feel about books, but really the lobbying has to be so much better than it currently is. The trade, from publishers through to authors, has been shamefully quiet. Will no-one speak out for books any more, or have the men in suits sitting in their quiet offices in central london passing PR messages back and forth finally won over the trade mavericks?

Tue, 22/06/2010 - 13:08
By Mostly Books Mark

That's a feature of the changing landscape. Fifteen years ago there was much more unity, because the message was clearer - if you're on the side of books, you are on the side of learning, education...the right side. And everyone loves to be on the winning side - all the big hitters come in behind you. Now, it's not so clear, and there's a lot of hedge-betting going on. Perhaps you work for a big publisher, and you are responsible for growing the eBooks side of the business, perhaps you think, 'oh well, if VAT comes in on paper books, perhaps it will level the playing field for eBooks'. Best to keep your head down and hedge your bets. The other reason of course (with respect to our industry representation) is that there might have been a political signal, and a decision made to implicitly redraw the battle line. Something akin to 'we can't defend zero-rating, but let's regroup behind 5%, something we can defend'...

Tue, 22/06/2010 - 13:51
By Pete Stevens

We're safe!

Tue, 22/06/2010 - 14:19
By Mostly Books Mark

I think, sadly, the clock is ticking on this one. I think recent changes and trends in the publishing world are making it ever more likely for a 'thin edge of the wedge' approach to VAT on books.

Where VAT gets levied and at what rate are highly political decisions (within the context of government's historically insatiable demand for tax revenue) and as such are highly dependent on how effective who is lobbying for and against a particular area.

In the early 90s, the case was still strong against a 'tax on learning' or 'tax on education' - but nowadays there are far more blurred lines between: children's books as toys (augmented reality, collector cards, fold-out, pull-outs, etc.), books as entertainment (celeb memoirs, TV tie-ins) and books as digital 'trojan horses' (i.e. Usborne Internet-linked, special websites with book codes to unlock section, etc) to name a few.

What this means is that there are probably lobbies within other industry sectors (toys, supermarkets, entertainment, digital publishing) who - if they are not actively lobbying for VAT on books (e.g. "to level the playing field" with respect to eBooks) - are definitely *not* lobbying for the zero-rate to stay. This weakens the potential political fallout - and thus makes it attractive for a tax-grab.

And if the government suddenly turned round and levied 5% on books specifically to fund libraries (for example)...who's going to argue against that?

Tue, 22/06/2010 - 12:14
By Over my dead body

Can't wait to see the roll-out of the BA's campaign, which no doubt has been under discussion for at least five minutes. Surely the time to speak out against these things is before the decision is made, not afterwards.

Tue, 22/06/2010 - 12:54
By BSEL

With VAT at 20% a

Sun, 23/01/2011 - 13:28
By Mostly Books Mark

I think, sadly, the clock is ticking on this one. I think recent changes and trends in the publishing world are making it ever more likely for a 'thin edge of the wedge' approach to VAT on books.

Where VAT gets levied and at what rate are highly political decisions (within the context of government's historically insatiable demand for tax revenue) and as such are highly dependent on how effective who is lobbying for and against a particular area.

In the early 90s, the case was still strong against a 'tax on learning' or 'tax on education' - but nowadays there are far more blurred lines between: children's books as toys (augmented reality, collector cards, fold-out, pull-outs, etc.), books as entertainment (celeb memoirs, TV tie-ins) and books as digital 'trojan horses' (i.e. Usborne Internet-linked, special websites with book codes to unlock section, etc) to name a few.

What this means is that there are probably lobbies within other industry sectors (toys, supermarkets, entertainment, digital publishing) who - if they are not actively lobbying for VAT on books (e.g. "to level the playing field" with respect to eBooks) - are definitely *not* lobbying for the zero-rate to stay. This weakens the potential political fallout - and thus makes it attractive for a tax-grab.

And if the government suddenly turned round and levied 5% on books specifically to fund libraries (for example)...who's going to argue against that?

Tue, 22/06/2010 - 12:14
By Over my dead body

Can't wait to see the roll-out of the BA's campaign, which no doubt has been under discussion for at least five minutes. Surely the time to speak out against these things is before the decision is made, not afterwards.

Tue, 22/06/2010 - 12:54
By BSEL

With VAT at 20% a

Sun, 23/01/2011 - 13:28
By AN Bookseller

What I find alarming Mark is how much better we all were at holding the line even as recently as 15 years ago, when a very clear message was very quickly put forward and then rammed home. Has so much been forgotten since those campaigns? It does feel like we are in very different territory in how we feel about books, but really the lobbying has to be so much better than it currently is. The trade, from publishers through to authors, has been shamefully quiet. Will no-one speak out for books any more, or have the men in suits sitting in their quiet offices in central london passing PR messages back and forth finally won over the trade mavericks?

Tue, 22/06/2010 - 13:08
By Mostly Books Mark

That's a feature of the changing landscape. Fifteen years ago there was much more unity, because the message was clearer - if you're on the side of books, you are on the side of learning, education...the right side. And everyone loves to be on the winning side - all the big hitters come in behind you. Now, it's not so clear, and there's a lot of hedge-betting going on. Perhaps you work for a big publisher, and you are responsible for growing the eBooks side of the business, perhaps you think, 'oh well, if VAT comes in on paper books, perhaps it will level the playing field for eBooks'. Best to keep your head down and hedge your bets. The other reason of course (with respect to our industry representation) is that there might have been a political signal, and a decision made to implicitly redraw the battle line. Something akin to 'we can't defend zero-rating, but let's regroup behind 5%, something we can defend'...

Tue, 22/06/2010 - 13:51
By Pete Stevens

We're safe!

Tue, 22/06/2010 - 14:19

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