Value Added Tax is a European thing. You’ve probably seen the lines of people waiting to reclaim it at Heathrow. It corresponds roughly to the sales tax we are used to in USA. We’ve had plenty of controversy over here about Amazon’s charging or not charging sales tax on book sales, but we have no great trouble accepting the principal. In Britain “No tax on knowledge” has been a much more live and effective rallying cry, originating in the early 19th century as part of the campaign to get taxation of newspapers repealed which finally happened in 1855.

You do not pay VAT when you buy a book in Britain — they are not exempt, they are zero-rated. It’s a bit like buying a free book from Amazon: they need to bill your credit card; they just charge it $0. There’s a crazy Heath-Robibson operation behind the zero rating. All the ingredients that go into a book are VAT rated, and there’s an elaborate system of exemption certificates and reclaiming. Ian Stevenson in Book Makers attributes the zero rating of books to two causes: Margaret Thatcher’s unwillingness to do anything Europe wanted, and her desire to keep in with the newspapers. It’s not immediately obvious why books remained tied to newspapers in this discussion: just our good luck.

The European Commission has just ruled that e-books are a service item, different from a book, so that the reduced VAT rate is not available in the digital world. Reuters informs of this decision. Ink, Bits, & Pixels reports on e-book prices now being charged at a VAT rate of 20%. This is obviously at odds with the taxes on knowledge strand of the UK attitude, and might be used as an excuse by some future government to tax books. Now we hear, via The Bookseller, that the French publishers’ association, the Syndicat National de l’Edition, has initiated a social media campaign aimed at influencing the European Commission to reconsider their decision.

The danger in all this is that governments love ways of raising money, and pointing out a lack of harmony between taxation of physical and digital books would seem more likely to swing them toward higher tax rates on physical books than lower rates on e-books.

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