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The International Publishers Association is calling on the Brazilian Government to abandon plans to impose Value Added Tax (VAT) on books. Currently, books in all formats in Brazil – print ebook, audio, and accessible – are zero-rated. The IPA – and book industries around the world – believes that books are strategic assets that activate the knowledge economy, facilitate upward social mobility, contribute to personal growth, and bring widespread social, cultural and economic benefits.
IPA Secretary General, José Borghino, said: “The IPA has been encouraged in recent years to see more governments around the world zero-rate books. Books are fundamental to creating the knowledge economy of the future, but the book market is highly price-sensitive. Any increase in cost, however small, can inflict serious damage to sales and therefore investment. In order to support the knowledge economy, to encourage reading and to promote the benefits of lifelong education, the IPA recommends zero-rating VAT for all books. The Brazilian government’s reported plans are a backward step that will harm local publishers, as well as undermining literacy programmes in the country.”
Currently, almost the entire Latin American continent zero-rates books. The IPA says that if Brazil bucks this trend and imposes a VAT on books, it would join only Chile and Guatemala to do so. It notes that recently, the EU began a process of lowering VAT rates by aligning ebooks with the rate for physical books. It points out that earlier this year, the Bulgarian and British governments used VAT as a way of supporting their publishers during the COVID-19 lockdown. The Bulgarian government cut VAT on physical books and ebooks until December 2021; and the UK government advanced its plan to zero-rate ebooks from December 2020, to May 2020.
The IPA observes that publishers have suffered everywhere during the pandemic, with Brazil being no exception. According to Nielsen Bookscan figures, at its lowest point (in May 2020) the Brazilian book market was a massive 47.6% below its 2019 level. Despite a recovery, that market is still 6.8% lower than last year.
The IPA argues that than a regressive measure like imposing a VAT on books, the Brazilian government should look to other positive measures to support its publishers. Examples of such government measures include reading vouchers, increased investment in library budgets, designation of books as ‘essential,’ and enabling bookstores to re-open during lockdown.