There’s a cracking story in the Bookseller this morning. The Publisher’s Association is calling on the government to cut VAT on eBooks to the zero rate enjoyed by print books. eBooks currently attract 20 per cent VAT, whereas print books are exempt on the grounds that they promote education.
The Publishers’ Association complains that eBooks provide the same social value as print books, and demand that the playing field be levelled. There is a further complication in that some digital companies, Amazon among them, are selling English eBooks from Luxembourg, which only levies 3 per cent VAT on eBooks. This puts British retailers at a competitive disadvantage at a time when the digital economy in books is booming. The EU plans to standardise VAT rates on suppliers of eBooks in 2015, but British publishers argue that they cannot wait until then.
There is, as far as I can tell, no indication that this afternoon’s Budget will cut the tax. But, of course, George Osborne may yet pull a surprise. Industry representatives, prepared for disappointment at home, are lobbing the EU to amend the VAT directive sooner than 2015.
The story is a fine example of how the emerging digital economy has made administering the single market more complicated, and how slow the European Union is to react to these economic changes. It is also a fine indication of the adage that governments never miss an opportunity to tax innovation and growth.
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