The taxing debate on books:
Michael R. James writes: Re. “Book industry report just the first page in publishing reform” (yesterday, item 5). The authors state: “Australia remains one of the only OECD nations to place a tax on books”. Corrie Perkin, an independent bookshop owner and journalist, was cited as saying “… I’ve never understood why they were considered a luxury item.” Neither of these statements has a solid foundation on evidence.
A survey of most of the major world economies reveals (in the table below) that only two of 18 countries put books in the zero-rated class for GST.
The UK is the only major economy that does not apply the tax to books. Six of these countries apply the full GST rate on books but most (10 of 18) apply a reduced rate. On Wednesday France signalled that it is raising its rate from 5.5% to 7% from next year. France applies the same rate to Amazon imports purchased online, as does Spain except it applies the full rate (18%) though that may be reduced soon.
The US does not have a federal sales tax or VAT/GST but all except five of the 50 states apply a sales tax and most do not exempt books. The three biggest states — California, Texas and New York — are suing Amazon for hundreds of millions of dollars (each) for lost sales tax, avoided because the goods are shipped interstate.
Clearly the notion that books should be exempt from sales tax is not commonly accepted wisdom around the world. Even as a bibliophile, I agree. The logic that books, some of which are involved in “learning”, should be exempt is not compelling. A sales or value-added tax is not a luxury tax and special pleading and vested interests will always try setting up categories of exemption for everything “essential” or considered “worthy”.
Having said that, a majority of countries apply a reduced tax rate which is generally lower than Australia’s rate. This strategy may be one possibility considered by Minister Carr. Given Australia’s relatively low GST it seems such a move would not be worth the administrative burden nor make enough difference to the book retailing market. A simpler alternative may be to return some of the tax take from GST on books back to the industry and writers as suggested in the BISG report.
But those policy options are mere Band-Aids none of which may ameliorate the changes sweeping the publishing industry worldwide. So, the argument logically returns to the issue of applying GST to imports, including online sales. The only truly rational response is as Jon Page (of Pages & Pages Booksellers) said: “Either remove GST on books in Australia or start adding it to the 53% of books purchased [last year] through international online sellers.” As I have argued in Crikey there is no logic in exempting online imports from GST. They escape only because historically it was technically difficult and administratively inefficient.
Whether that logic persists as worldwide online retailing grows relentlessly into a large fraction of bricks-and-mortar retailing is the real question. Are we really going to anomalously not tax this retailing sector even as it reaches billions of dollars while simultaneously undermining Australian-based authors, publishers and retailers?
Marcus L’Estrange writes: Re. “Unemployment figures defy the pessimists again” (yesterday, item 2). Once again, despite my innumerable attempts, Bernard Keane rises to the task of showing his ignorance of how the monthly unemployment figures are arrived at.
No one in their right mind believes in the monthly unemployment figure from the ABS “Labour Force” survey simply because this figure is derived from a political definition of unemployment, not an actuarial one.
Serious writers or commentators concentrate on the ABS survey: “Persons not in the labour force” which shows a real unemployment figure of 2 million or 20% of the workforce, chasing around 180,000 vacancies. After all we have 1.75 million on one of the six dole payments.
Why not contact Roy Morgan for his estimate? This is clearly higher than the ABS “Labour Force” survey.