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  July 2004
 
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  Francisco Balsemão
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  Chairman and CEO,
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Commissionner Frits Bolkestein
European Commission
200 rue de la Loi
B-1049 Brussels

27th June 2003

Dear Commissioner Bolkestein,

VAT on printed products

The European Publishers Council (EPC) is a high level group of Chairmen and CEOs of European media corporations actively involved in multimedia markets spanning newspaper, magazine and on-line database publishers.  Many EPC members also have significant interests in private television and radio.

The EPC is not a trade association, but a high level group of the most senior representatives of newspaper and magazine publishers in Europe. The group was founded in January 1991 with the express purpose of reviewing the impact of proposed European legislation on the press and then expressing an agreed opinion to the initiators of the legislation, politicians and opinion-formers. A list of our members is attached to this letter.

EPC believes strongly that in order to stimulate higher levels of literacy, create a more educated workforce and thereby increase competitiveness in the European Union, printed material of all sorts should be widely available to the public.  It also believes that this wide availability of a variety of literature in magazine and newspaper form will help promote freedom of expression in the European Union and foster a society which respects the ideas and philosophies of others.

As I am sure you are aware, the printed press is included in Annex H of the VAT Directive and Member States may choose to apply a lower VAT regime to the sale of newspapers and magazines.  If this situation were to change, those Member States would be obliged to apply the normal rate of VAT to newspapers and magazines, with disastrous consequences for the consumer and for the level of literacy within the European Union.

The likely result of obliging Member States to charge VAT on the printed press would be an increase in cover price, falling subscriptions and ultimately a much narrower group of publications for consumers to choose from.  This in turn will have an effect on the competitiveness of the industry, which is one of the largest employers in the EU.

The European Union has made clear its intention to create
"the most competitive and knowledge-based economy in the world by 2010".  It is incumbent upon business and government alike to aspire towards this goal. Higher rates of VAT on the printed press will act as a brake on the competitiveness of an industry which has made great contributions to the economic success of the European Union.

Furthermore, a knowledge-based economy can only be stimulated by wide access to a variety of literature.  Value Added Tax levied on the printed word is a tax on information, opinion, education and literacy – all of which are too important to be handicapped by taxation.

There is no evidence we are aware of that differences in VAT treatment of print products in the EU has any material effect on cross-border trade and accordingly there would be no justification for making any change in the current VAT treatment of print products.

The EPC urges the Commission to consider these facts when it discusses the possible changes to be made to the current VAT regime.

Yours sincerely
 

FRANCISCO PINTO BALSEMÃO

Chairman, European Publishers Council