Trade fears over VAT threat from 'emergency budget'

<p>The book trade faces a nervous wait today amid speculation that VAT could be imposed on books in the &#39;emergency budget&#39;. Before the General Election the Tories said they would not apply VAT to books, but some publisher sources said there was now a &quot;40/60&quot; 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.</p><p>Printed books are currently zero-rated, though digital and audio books attract the full rate of VAT of 17.5%. </p><p>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&#39;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.</p><p>Tim Godfray, chief executive of the Booksellers Association, said that the BA had been working &quot;closely&quot; with the Publishers Association &quot;to anticipate and plan for any measures that could be applied to books and their related businesses&quot; in today&#39;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.<br /> </p><p>In a straw poll taken by <em>The Bookseller</em> 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. </p><p>At the time, then-shadow culture minister Ed Vaizey told <em>The Bookseller</em>: &quot;<a href="../news/115668-tories-promise-to-keep-books-vat-free.html" target="_blank">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.&quot;</a></p><p>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 &#39;tax on publications&#39;. It was thrown out of Parliament as a &quot;barbarous thing&quot;. </p>