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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".