Government must support cut to tax on reading and learning

Publishers have today called for the UK government to support new powers that would allow VAT to be removed on ebooks, audio books and online newspaper and magazine subscriptions in the UK.

At a European Union meeting today (Friday), Finance ministers will discuss new proposals that would allow all member states to reduce the amount of VAT they apply to epublications, or not to tax them at all.

In the UK this would mean a 20% reduction in the tax currently applied to digital publications which is not applied to print versions. 

Stephen Lotinga, CEO of the Publishers Association, said: “The government must do everything it can to cut the unfair tax on ebooks, magazine and newspaper online subscriptions. 

“It makes no sense in the modern world that readers are being penalised with an additional 20% tax for choosing to embrace digital.

“Whether a book, newspaper or magazine is electronic does not change the principle that we should not be taxing reading and learning. 

“This would also show the world that the UK is really serious about building a forward-thinking digital economy.”

Notes to Editors

1. At the Economic and Financial Affairs Council meeting in Brussels today a proposal will be considered which would allow all member states in the EU to reduce VAT on epublications (digital versions of books, journals, magazines and newspapers). This proposal has already been supported by the European Commission and Parliament and now just requires sign off by the Council of the EU.
2. The Publishers Association has written to the Rt Hon Philip Hammond MP, Chancellor of the Exchequer, ahead of the meeting to reiterate support for this measure and to urge the UK Government to ensure this proposal is adopted without delay. Many other EU countries have already signalled their intention to remove VAT on ebooks once the blockage is resolved, but the UK is yet to do so. 
3. UK readers pay 20% more for ebooks, audiobooks, journals, magazines and newspapers than they do for their identical, printed equivalents. 
4. The discrimination between print and digital versions runs counter to the UK government’s position for more than 40 years that books and learning materials should not be taxed. If the ban is lifted, the UK government would then have the power to zero-rate epublications in line with the zero-rate applied to print equivalents.
5. Not only is the current discrepancy illogical, it is also discriminatory as it hits vulnerable groups hardest. These include the blind or visually impaired, who listen to audiobooks; students, who pay more to read academic journals; and young people from disadvantaged households, for whom ebooks are increasingly the first or only kind of book they have access to in the home. 
6. According to the National Literacy Trust, 80% of children read ebooks, whereas only 60% read books in print. Statistics from Nielsen show that one-third of ebook readers are low earners (under £24,000 per annum), one in 5 are aged 65+ and ebook readers are also predominantly female (64%). Taxing reading and learning for all these groups is illogical and unfair.

UPDATE: The Publishers Association has submitted a response to the House of Commons Treasure Committee inquired into VAT (1 June 2018), calling for the government to zero-rate VAT on epublications. Read the submission here.