Books are likely to become more expensive, the reason is not just the higher tax

Prague - Books will likely become more expensive starting in January. The price will be influenced by a higher value-added tax (VAT) rate that will come into effect, as well as the rising costs of energy and other inputs. Some large publishers do not plan to pass the higher tax onto book prices, but they view the change in rate, like others in the industry, as a bad move. In Europe, this tax is often five percent; in some cases, books are even exempted from it. According to the Czech Association of Booksellers and Publishers (SČKN), the planned increase in the lower VAT rate from five to nine percent contradicts the policy of increasing the education level of the nation.
The increase in VAT on books, newspapers, magazines, and other cultural necessities is part of the government’s tax reform. Since its announcement, this proposal has faced opposition - in spring, the Writers' Guild, SČKN, and the leadership of the National Library stated that the increased tax would worsen the conditions for publishing and distributing literature. SČKN is convinced that increasing the tax at a time when children's interest in reading is declining will lower the education level of future Czech populations. Education costs are reportedly expected to rise.
In developed countries with higher VAT on books, such as Austria and Denmark, the state compensates schools for the taxation with higher subsidies for purchasing textbooks, which are about ten times more than what they receive in the Czech Republic. The SČKN points out that schools in the Czech Republic still use textbooks that are as old as 20 years. In the case of high schools, the Czech state does not subsidize the purchase of textbooks at all.
Any price increase is unlikely to be "staggering." Those preparing for it are already factoring the new tax rate into manufacturing. "Most publishers are already increasing prices for the Christmas market, and some have been calculating prices with the higher VAT for a longer time, approximately since this spring when discussions about the VAT increase began," said Jiří Padevět, director of the Academia publishing house, to ČTK.
"We expect a general increase in book prices in 2008 of approximately seven to nine percent," stated Michal Krejčí, the general director of the Albatros publishing house, to ČTK. Albatros will increase its recommended retail prices for about 600 titles starting January 1, while it will maintain prices for "a range of others."
For large publishers, the change in tax is likely not to be so significant; however, small publishers may feel its effects, particularly making it harder to produce low-cost editions. If the tax is reflected in their prices, both readers and libraries will notice it when purchasing. Only four libraries in the Czech Republic receive mandatory copies for free, while others must buy them. If books become more expensive, public libraries will have to further reconsider their already strained budgets, according to many.
The SČKN admits that a higher tax may manifest in a reduction of the number of publishers or the range of their offerings. "However, this is not expected to happen on a large scale," said Jiří Vedral, the secretary of the union, to ČTK. According to him, the price increases will only affect a small portion of previous production, most often a few best-selling and expensive titles and books expected to sell over the long term. The price change will not affect more than ten to fifteen percent of the titles published that are currently on the market, Vedral estimates based on publishers' statements.
One publisher that will not increase prices is the Euromedia Group. With nearly 500 titles per year, it is the largest publisher in the Czech Republic. "We are not planning any special price increases based on the new VAT rate. However, I consider the VAT increase for books to be an incorrect step," said Andreas Kaulfuss, the general director of this publishing house.
According to the SČKN, a nine percent tax will place the Czech Republic among the top positions in terms of VAT on books within the EU countries. Books are completely exempt from VAT in Britain, Norway, Ireland, Romania, and Cyprus, while a lower than five percent tax exists in Greece, Italy, Luxembourg, Spain, and Switzerland. However, Padevět from Academia reminds us that, for instance, VAT on books in Slovakia has been 19 percent for several years, and the Slovak book market is functioning. Moreover, in all neighboring countries, books are currently more expensive than in the Czech Republic, he adds.
In the Czech Republic, the issue of taxing books has been debated since the early 90s, when a five percent tax was established, which, according to booksellers, the Writers' Guild, and the National Library, protects culture. "Market conditions do not threaten the development and publishing of literature, provided that the book is not regarded merely as goods but is supported by the state and private institutions as a cultural asset," they state.
However, numerous factors are reflected in the final price of a book, of which VAT is just one.