Trade relieved over VAT, despite 'catastrophic' increase for audio and e-books

<p>Book trade bodies have breathed a sigh of relief after chancellor of the Exchequer George Osborne announced today that books would continue to be exempt from VAT. </p><p>But those working in digital and audio books described the increase in the top rate of VAT from 17.5% to 20% as &quot;catastrophic&quot;.</p><p>Mark le Fanu, general secretary at the Society of Authors, said he could &quot;breathe again&quot; after the announcement. </p><p>&quot;It is a great relief that VAT is not being added on ordinary books,&quot; he said. &quot;I&#39;m rather intrigued that books, magazines and newspapers are described as &#39;essential items&#39; along with food and clothing, but long may it continue.&quot; </p><p>Le Fanu added: &quot;At the moment, authors&#39; income from e-books is pretty low, so although [the VAT rise] is regrettable, I don&#39;t think the impact will be enormous in the short term.&quot;</p><p>PA chief executive Simon Juden said the move showed the government had &quot;recognised the extraordinary benefit the whole country derives from supporting books and other printed matter&quot;.</p><p> &quot;Our industry brings so much in economic, social, cultural, educational and scientific terms to the UK, and the book trade contributes significantly to social mobility through literacy programmes and other activities &ndash; areas on which we will continue to work closely with the coalition government,&quot; he added.</p><p>Tim Godfray, chief executive of the Booksellers Association, described the decision to continue to zero-rate books as &quot;of great significance to those of us in the book trade&quot;. &nbsp;</p><p> &quot;Our members face any number of other challenges, not least the very real threats to the British High Street whose survival we campaign so vigorously for on behalf of our members, and we are very pleased that in spite of these national financial pressures this government has given a clear commitment today not to tax printed books during the lifetime of this parliament. Excellent news.&quot;</p><p>Bridget Shine, executive director of the Independent Publishers Guild, agreed. &quot;We are pleased &#9472; and relieved &#9472; that there will be no VAT on print books and we welcome the reduction in corporation and small companies tax.&quot;</p><p>However, she joined with those who were concerned over the increase in VAT on audio and digital books, confirming the IPG planned to lobby the government over the discrepancy. </p><p>The PA&#39;s Juden added: &quot;The PA has been closely involved in discussions with government on this issue and those discussions are ongoing.&quot;&nbsp; </p><p>Ali Muirden, co-founder of digital audiobook publisher Creative Content, said: &quot;It is a real problem as many people feel the price of an audio book, download or e-book is too high at present, and margins for the publishers are very tight as it is. It probably means many publishers will have to put up their prices slightly to compensate for the increase next year, but we&#39;ll have to wait and see what the major publishers decide to do too.&quot;</p><p>Clive Stanhope, managing director at spoken word specialists CSA Word, called the VAT increase &quot;catastrophic&quot;. He said recommended retail prices on audiobooks would have to be increased as a result. &quot;It will increase the price differential between paper and audiobooks,&quot; Stanhope added. Stanhope has been campaigning since 2002 to get the VAT on audiobooks to be zero-rated and added he would also now lobby the government to try to get the rate lowered.</p>