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VAT on reading: Latvian experience from 2009

VAT on reading: Latvian experience from 2009. Renate Punka Head, Council of Literature and Culture, Latvian Ministry of Culture. Agenda. Brief history Immediate effect Delayed effects Does VAT make a difference? Lessons learned Latvian publishing industry in 2010.

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VAT on reading: Latvian experience from 2009

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  1. VAT on reading: Latvian experience from 2009 Renate Punka Head, Council of Literature and Culture, Latvian Ministry of Culture

  2. Agenda Brief history Immediate effect Delayed effects Does VAT make a difference? Lessons learned Latvian publishing industry in 2010

  3. November 29, 2008 December 12, 2008 December 18, 2009 – July 23, 2009 August 1, 2009 Idea of raising VAT first announced publicly by Minister of Finance Parliament vote about VAT (5% goes up to 21%) Lobbying for reduced VAT Reduced rate (10%) for books become effective for all original works Brief history

  4. Immediate effect Frozen projects, laid-off employees, cancelled contracts Sharp decrease of sales and new orders Desparate activities of publishers and booksellers to create cash-flow Debts to tax institutions

  5. Delayed effects Statistics of 2009: Number of new titles per annum – lowest in the last decade (2244, decrease from 2008 – 23%) Total print-run of new titles – lowest since 1992 (3,5 mln copies, decrease from 2008 – 33%) Distorted proportion of “ healthy” sales vs SALES Decrease of average price per copy

  6. Does VAT make a difference?

  7. Lessons learned • Lack of proper statistics – obstacle to prove the miscalculations of state officials • Books have no price elasticity (RRP vs purchase value) • Reduced VAT – the only real instrument to keep industry competitive (esp. in times of downturn)

  8. Latvian publishing industry in 2010 • A year of reading and More than one life initiative (www.vairaknekavienadzive.lv) • Reading promotion campaign Attention! Boys Reading! • Libraries as the substitute for regular book buying: pros and cons • New lobbying campaign for low VAT

  9. For more information, please, contact: Renate Punka: renate.punka@jr.lv Latvian Publishers Association: lga@gramatizdeveji.lv

  10. THANK YOU for attention!

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