After a decade or more of wrangling, just weeks before the UK voted to leave, the EU Commission finally agreed an action plan to resolve the illogical system of VAT controls that prevent retailers and publishers treating printed and digital magazines equally.
The proposals, put out to consultation this month, aim to "allow Member States to apply to electronically supplied publications the same VAT rates that Member States can currently apply to printed publications." A battle that it once seemed impossible for publishers to win has taken a big leap forward after years of lobbying.
The consultation document goes further, accepting a position argued for by PPA and others representing newspapers and books that while different platforms provider readers with choice they "offer the same reading content for consumers and the VAT system needs to keep pace with the challenges of today's digital economy".
The argument has always been clear, from the day VAT was introduced in the UK in 1973 – the enjoyment and enrichment gained from reading magazines, books and newspapers should not be penalised through VAT. From its inception, through our joining of the European Union and through various recessions and reforms the PPA – as the voice of publishers – have fought and protected publishers and readers from this tax.
But as the world changed and content flowed out into a multi-platform eco-system, the hard-won protections afforded to the printed word have not been translated into the digital landscape. In a large part this was a result of European Union legislation prohibiting neutral treatment.
The argument has always been clear, from the day VAT was introduced in the UK in 1973 – the enjoyment and enrichment gained from reading magazines, books and newspapers should not be penalised through VAT.
Our digital editions have been left attracting the full rate of VAT – a whopping 20% penalty for those who choose to consume great journalistic, editorial and literary works via a different medium than traditional ink on paper.
For some the Commission’s move may seem like too-little, too-late. But, with another two years before the UK’s likely departure from the EU this consultation and the legislative proposals we expect as a result, cannot come soon enough.
There is an important symbol of the UK breaking free of European control that can be exercised earlier than our formal departure date, in an ironic twist of EU bureaucracy that may repatriate powers to Her Majesty’s Treasurer before the Department for Exiting The European Union gets to snatch them out of the Commission’s hands.
With publishers now delivering rich content across an array of platforms, and the UK unshackled from the European rule book, our domestic tax regime can finally catch up with the internet age. The new chancellor should act in his Autumn Statement, Mr Hammond’s first "fiscal event", to signal the change and apply the VAT zero-rate to magazines, books and newspapers in all their forms.
With publishers now delivering rich content across an array of platforms, and the UK unshackled from European rule book, our domestic tax regime can finally catch up with the internet age.
Such a move would demonstrate to consumers and publishers that there is positive opportunity outside the EU and provide a much needed boost to confidence. Not to mention ending the complex nature of pricing and VAT accounting for bundled subscriptions, which nobody – not even HMRC – has a clear and concrete view on.
Of course, cutting the VAT rate to zero would have a cost – but that is a bounty from which the Treasury has unexpectedly benefited from for over a decade. It was never in the Revenue’s forecasts that the publishing industry would move so extensively into a digital world and bring with it a VAT bonus – money that could have created innovative new products and ways to engage the next generation of readers; cash that could have been invested in authors, journalists, creators; cash back in consumers’ pockets.
The new prime minister has been keen to signal that Brexit-means-Brexit but to also stress a change in the narrative of her Government. The One Nation PM breaking down social, regional and generational inequalities wherever they arise. She will be keen to note that the majority of young people prefer reading on screen to print and the latest NLT survey shows that trend accelerating with more preferring digital to printed formats.
The disadvantaged young boys she spoke of on the steps on Downing Street already struggle to engage with reading, a price penalty of their preferred format is an unwelcome barrier.
With the referendum result putting us in the EU departure lounge, the UK must still maximise this opportunity and back the Commission in order to implement an immediate VAT cut to support investment in our sector. Removing the penalty faced by readers, and providing incentives for publishers to invest, and ensuring a vibrant and diverse publishing sector for future generations.
To maximise our audience and inform, educate and entertain the next generations of readers, we need equal tax treatment across these platforms. Now is the time for the Government to deliver.
Owen Meredith is the head of public affairs at the Professional Publishers Association (PPA). He also leads for PPA on licensing and sits on the Board of NLA Media Access.