In response to the Treasury Select Committee’s recent inquiry into VAT, the UK Professional Publishers Association has called on the Government to consider the impact the current tax system is having on the publishing industry.
Since the introduction of Value Added Tax in 1973, magazines, newspapers and books have been subject to a zero rate. Recognising the value of reading and journalism to civic society, this ensures VAT does not act as a disincentive to reading.
However, this recognition has failed to keep up-to-date with technology, and as journalism and magazine media moves increasingly digital, the tax system has lagged behind. Unlike their traditional counterparts, e-publications and other supplies that are provided along with publications (e.g. access to the electronic version of a newspaper when the physical copy is purchased) are subject to the highest rate of 20%. This unnecessarily complex VAT on digital platforms is stifling publishing innovation and investment.
The PPA is using the Committee’s Inquiry on VAT to highlight this long-standing anomaly in the tax system, as well as argue for VAT platform neutrality – and the recognition of products regardless of the platform for delivery to the consumer.
The submission, backed by a heavyweight economic study, urges the committee to recommend modernisation of VAT that will be allowed after Brexit.
Commenting on the submission, PPA Managing Director, Owen Meredith said: “The Committee’s inquiry is very timely and presents a welcome opportunity for us to highlight the inherent unfairness in the tax system. The print-only restriction of the current rules add unnecessary complexity to the tax system that damages consumer choice, holds back innovation and investment, and fails to meet the tests set for good tax principles.”
Meredith added, “Magazine publishers are growing audiences and the reach of magazine media through digital platforms. The ability to properly monetise this growth and invest in the future of journalism is hampered by the tax system and needs urgent reform.”