While the e-book world debates issues such as piracy and the actual sales of the Kindle, I see many fewer posts on another cosmic topic.
How about onerous taxes on e-books, despite the cultural and educational benefits of many titles? Sweden and Denmark charge outrageous VATs of 25 percent, and even the UK’s 17.5 percent is a real squeeze.
Click on the image for a better view of some e-book-related VAT stats that OverDrive shared at a recent IDPF conference. The full PDF on the international book trade, including some helpful advice for publishers eying the global market, is here. Let me reveal my own prejudice against VATs as regressive, even though, yes, you can alter income tax rates to reduce the damage.
Even in the U.S., which mercifully lacks a VAT, taxes are a timely topic, given the eagerness of New York State and other jurisdictions to tax purchases from Internet retailers. I’d love to see reductions or even elimination of sales taxes on most purchases, virtual and physical.
Coming up later today: My analysis of PW editor Sara Nelson’s problematic analysis of the future of e-books. No flames here. If anything, Sara is more open minded about e-books than is the book trade as a whole. And that’s all the more reason to parse her thoughts to grasp the challenges of enlightening traditional publishers.
Hello David
Just a quick rundown of the E-book situation here in Denmark: Audiobooks are catching on, Danes listen to books in their cars now. I’ve been reading e-books in English for years, but I haven’t seen a single E-book in eReader format or Plucker in Danish language yet (apart from the ones I converted myself using DropBook, plus about 20 classics in Plucker format at gutenberg.org. Though of course there are PDF’s to be downloaded that could be considered E-books).
We still haven’t really had e-books introduced here, or maybe people don’t like to read on little screens.
Yes indeed, the VAT is really steep in these parts. We used to say it was the only way we could raise our BNP in Denmark, VAT is making sure some of the price of imports stays here! But that excuse doesn’t really do it anymore, now they pump oil from the North Sea. And the Swedes, they have all kinds of raw materials from their mines.
Do they have e-books in Swedish? I don’t know…
Best regards, Søren
These percentages are high. How do they compare with print books? How do they compare with consumer products in general in the society? I’d pay more if I didn’t have income tax. By the way, wikipedia says in EU the minimum VAT is 15%, so maybe these percentages don’t seem that outrageous.
Søren, it’s wonderful to hear from you. I love it when people write in about the general e-book situations in their countries (even when the thrust of the posts might not be on the original topics exactly).
Please feel free to add more details if you’d like, and others are welcome to contribute as well. No risk of Topic Police stepping in. I’m Cop #1.
One big question, of course, would be people’s thoughts on whether VATs might indeed crimp the spread of E.
Meanwhile, Søren, here’s hoping that Danish-language books in all major formats, including the new ePub standard, will soon show up. If publishers want to discourage piracy, one of the best ways is to preempt the bootleggers—with legal editions!
As for Sweden, I hope we can hear from there as well.
Kind of related: I’ve read somewhere that the Danes are among the happiest people on earth. I think that’s a real tribune to the Danes. Perhaps the end of the VAT on e-books could help nudge up the happiness score to an even higher level!
An aside to Robert: The best VAT tax percentage is 0—in fact, no VAT, given the burden on merchants and other citizens.
Special thanks,
David
Bands are having difficulty touring because of the oil prices. Does that make OPEC thiefs?
Robert, I don’t know about other countries, but in the Netherlands it’s roughly: financial services, mail and education either have no VAT or a rate of 0% (the difference is that an entrepreneur may deduce VAT in the second case), food and other essentials have 6% VAT, and all non-essentials, such as TVs, clothes, and indeed books, have 19% VAT.
David, what’s this “burden on merchants” you speak of? And why is “no VAT” better? .
Branko, yes. Cartels are a gentlemanly form of theft. Then again, I can’t place all the blame on OPEC. Its members are just making up for past abuse from the United States.
The burden on merchants? Paperwork. Plus the lost business due to the higher costs of goods to consumers.
No VAT is better for those reasons and others, including the risk of tax-rate adjustments not doing the trick.
Thanks,
David
The state “needs” a certain amount of money. If it cannot get it via VAT, it’ll find other ways. VAT can be useful because it adds to the instruments the state has to extract this money in as fair a way as possible. If the state for instance only asked for income tax, we’d soon get a situation where the rich, like Google’s founders Page and Brin already do, “earn” yearly incomes of 1 dollar. VAT makes sure that at least some of that Google money flows back to the tax payer.
Oh, heck Branko, there are other ways of taxing the wealthy, such as through taxes on realized gains—beyond which I doubt that Page and Brin’s spending is that large compared to what other means could yield for the state. By the way, at least here in the States, corporations are bearing a lower percentage of the burden than in the past. Regardless of our differences here, I know your heart is in the right place–we both want tax systems fair to the average citizen, whatever the country. Thanks. David
Branko mentions the creators of Google, Page and Brin. They probably do pay some taxes. California has a statewide sales tax of 7.25%, and local supplementary taxes are allowed up to 8.75% according to Wikipedia. There is also long-term capital gains tax of 15% in the United States. Therefore when a stock owner sells shares for expenses or to make other investments he or she must give money to the state. California also has a property tax on real estate and therefore any person with a multimillion dollar house is paying an annual tax for his or her palatial estate. I suspect that Brin and Page have very expensive houses since even small houses are expensive in the region of California where Google headquarters resides.
The United States does not currently have a “wealth tax”, i.e., a tax on the net worth of an individual. If it did then Brin and Page would probably be required to pay substantial sums. Some countries impose a wealth tax, e.g., France, Spain, Greece, Switzerland and Norway. Wikipedia states:
I think i remember that sweeden at least used to exempt books and music from VAT entirely it seams odd that they have VAT on ebooks though. And i know that a VAT reduction on books have been debated in denmark aswell. but theres something strange happening to the law’s when things become pure digital information.
I havent seen an fiction ebook in danish yet but in my studies ive come across plenty of hard non fiction mainly as PDF’s or paywalled web-content.
There been some attempts at selling for dummies type of guides as ebooks aswell but without much commersial success.
Theres a scandiavian counterpart to project gutenburg prjekt runeberg as far as i can see run by the royal library of sweeden, and the royal library of denmark seams committed putting some of the old and rare books online aswell. and the general municipal libraries seams to have some interest in E aswell, and is attemting to put what they can online, but limeted resources and the lack of any common library means it’s limited whats actually avaliable. and where royalties on p-books from libraries are regulated by a common framework i dont think it covers E aswell.
I dont think theres any attempt to do anything commersial with ebooks in denmark at the moment. It’s all either academic or “public service”.