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PPA responds to Treasury Select Committee VAT Inquiry call for evidence

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In response to the Treasury Select Committee’s recent Inquiry into VAT, the PPA has outlined its stance and a case for reforming the outdated tax system.  

Find below the statement from the UK's Professional Publishers Association:

This submission calls for the government to consider the impact the current tax system has had on the publishing industry.

The PPA welcomes the Committee’s Inquiry on VAT and the opportunity to highlight a long-standing anomaly in the tax system that damages consumer choice, holds back innovation and investment, and fails to meet the tests set for good tax principles.

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.

That recognition has failed to keep up-to-date with technology, and as journalism and magazine media moves increasingly digital, the tax system has dragged 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) is subject to the highest rate of 20 per cent. This unnecessarily complex VAT on digital platforms is stifling innovation and investment. 

With publishers continuing to face economic challenges from declining advertising revenue and circulation volumes – despite growing audience reach through digital platforms – the urgency to adapt the existing VAT system and support UK businesses has never been greater.

The PPA has used this Inquiry to argue for VAT platform neutrality – and the recognition of products regardless of the platform for delivery to the consumer. Magazine publishers represent an innovative and creative industry, generating new ways to engage with consumers. This should be celebrated, not penalised.

Through the freedoms granted by Brexit, or the passage of the proposed Council Directive on reduced VAT rates for electronic books, newspapers and periodicals, the UK will be free to update tax policy accordingly and reduce rates on e-publications to honour the intention of the policy.

Read the PPA’s full response here

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