The Government has reaffirmed its manifesto commitment not to change the zero-rate VAT on newspapers and magazines after the European Commission reactivated the debate on creating a single European rate.
The EC has set out the options for reforming the current agreements on reduced VAT rates, which include the UK’s zero-rating on books, magazines and newspapers.
Responding to a written question in Parliament, the Government issued assurances that it would not agree to any proposals that would ‘harm our social objectives or undermine the fairness of the UK VAT system.”
The Government currently has a manifesto commitment not to extend VAT to food, children’s clothes, books, newspapers and public transport fares.
The Newspaper Society (NS) said the retention of the VAT zero-rate on newspapers was immensely important.
Santha Rasaiah, director of political, editorial and regulatory affairs at the NS, said: ‘The newspaper, magazine and book publishing industries had fought hard to retain the zero-rate for the printed word under EU VAT agreements and in the UK when threatened with imposition of VAT in the Eighties and early Nineties.
‘The NS had asked the Labour Party to repeat its commitment not to impose VAT on newspapers in its successive election manifestos, including the last, and also received assurances from Gordon Brown, when Chancellor, that newspapers would continue to be zero-rated.”
Ian Locks, chief executive of the Periodical Publishers Association, said: ‘It would be detrimental to the business models of publishers. There is a 100-year history in this country that you don’t tax knowledge.”
Any changes to the European VAT regime would require the agreement of all 27 EU member states. The European Newspaper Publishers Association (ENPA) is meeting the EC to discuss the communication in the latest round of its talks on the future VAT regime, and the PPA has assured that it will be following the situation closely and ensuring the message at European level is one of ‘no change”.