Kanzelsberger: small publishers & bookstores will be hard hit by VAT hike

08-03-2011

Publishers, booksellers as well as many consumers in the Czech Republic are far from happy about the government’s intention to raise the VAT on goods including books to a uniform 20 percent to help pay for its pension reform. Those in the book market fear that it will be hard hit and say that in principle books as a cultural mainstay should be exempt, and that has led to an online petition now signed by more than 80,000. But so far – despite the culture minister’s own misgivings over the higher VAT on books – there has been no signal from the government that books should be left out.

A little earlier I spoke to Jan Kanzelsberger, jr., who runs one of the country’s most successful bookstore chains, and asked him how he saw developments:

“It is a complicated question: if the government raises the VAT uniformly on all goods it will be difficult to argue in favour of only books. But if there are exemptions, there is a case for readers, publishers and bookstores to argue that reading and books, as a ‘basic need’ in a cultural society, should receive help. Regarding the influence on the market if the VAT hike goes through, we are afraid it will have an impact. The last two or three years have seen an decrease in turnover due to the economic situation and seen a drop in demand, so a raise in the VAT to 20 percent at this time is not a very welcome development.”

Jan KanzelsbergerJan Kanzelsberger There is clearly public support – more than 80,000 people have signed a petition asking the government not to raise the VAT on publications... But what is striking is that other European countries like Great Britain, Ireland, Norway, don’t have such a rate on books at all: do they see the situation differently than here?

“I am afraid they do. Those markets are much more developed than the book trade here. The turnover in such countries is much higher and more stable: here it is small and concentrated only on this region and the number of books and amount of money in the market is much more limited. So we are much more sensitive to readers’ habits and attitudes, so here the VAT can have a big effect.

“At the same time, it’s important to stress that no Czech government has expressed a will to protect books in any special way and I now see this as ‘characteristic’. I am not confident this will change in any way in the near future.”

If books are not excluded from the VAT hike, where will that leave the smaller publishers?

“There will be an influence: current readers will be much more selective – they are already due to the number of titles on the market and the relatively high cost of books, but they may become even more so. I don’t think it will be a disaster but it will be a situation where people will have to think more about what they spend their money on and there will be daily items or needs that may be a more important.

“The smaller publishers will have to plan much more carefully about new titles for the future and they will face greater risk in this kind of market. The other problem will be for the small booksellers whose future is closely tied to turnover and if the turnover decreases by more than five or 10 percent it could prove very crucial and they will find it difficult to survive. Those are two major effects which I think will come about.”

08-03-2011