Posted in: Comics | Tagged: amazon, comixology, digital comics, sales tax, vat

UK Drop 20% VAT Sales Tax On Digital Comics, Will ComiXology Follow?

Bleeding Cool pointed out earlier this year that a comic-book-reading political adviser to the UK Conservative Government who buys loads of stuff on ComiXology, specifically placed into the Budget plans to drop the VAT sales tax of 20% charged on digital publications. It happened in the week after Amazon-owned ComiXology decided to stop subsidising the cost of UK and European digital comics by a) making the exchange rate closer to what it actually was, b) not absorbing the cost of sales taxes and c) adding something on top to make up for all the money they had been losing to a) and b) over the past five years. It saw digital prices rise by up to 70% as a result, not just in the UK but in the EU as well, as prices on the Euro were matched with the pound.

Well, as of yesterday, the UK government decided not to wait until the end of the year, and UK leaving the EU properly, to implement that change. Digital publications from comic books to newspapers to clit-lit to Bibles currently have a zero rating on sales taxes.

This move will potentially slash the cost of e-books and newspapers making reading more accessible as people stay at home. Research by the National Literacy Trust indicates that 1 in 4 pupils on free school meals say they read fiction digitally compared to 1 in 6 of their peers not eligible for free school meals and that over 45% of children prefer to read on an electronic device.

Chancellor of the Ezchequer Rishi Sunak said the zero rate of VAT will now apply to all e-publications from today, seven months ahead of schedule – potentially slashing the cost of a £12 e-book by £2, e-newspapers subscriptions by up to £25 a year and a £3.99 comic book by 66 pence.

We want to make it as easy as possible for people across the UK to get hold of the books they want whilst they are staying at home and saving lives. That is why we have fast tracked plans to scrap VAT on all e-publications, which will make it cheaper for publishers to sell their books, magazines and newspapers.

Culture Secretary Oliver Dowden said:

This tax relief on subscriptions to digital publications will boost our world-class publishers, save consumers money and reflects the surge in popularity of e-reading as we stay at home to protect the NHS. I hope to see it benefitting the news industry through increased sales of e-newspapers as they continue to provide a vital public service giving people accurate and trusted information about coronavirus.

ComiXology and Amazon should put their prices back down as a consequence. Maybe not to the pre-Brezit prices, but there should be a noticeable change from the $1 to £1 pricepoint they currently use. But also the change should make it easier for creators to self publish digitally as well as in print, as a major cost and lots of administrative burden has been instantly eliminated. Which is the kind of thing that Conservative governments are meant to do – but rarely actually do.

The change came into effect today. We will watch to see if ComiXology and Amazon follow suit. They really should. Maybe hold off buying this week's comic books digitally until the change comes in.

On average publishers in the UK are reporting an increase of about a third in e-book consumption during the crisis, with some publishers reporting as much as a 50% increase. In the last seven days alone, subscriptions to TI media are up 200%, whilst Hearst's new subscribers were up more than 100% year-on-year across the second half of March.

Will de Peyer, spokesperson for the Axe the Reading Tax Campaign, said:

Axing the Reading Tax with immediate effect is exactly the right response from the Chancellor in these difficult times. With people doing the right thing and staying at home it is great that they will no longer have to pay tax on e-books to keep them and their kids entertained.

Stephen Lotinga, CEO of the Publishers Association, said:

We welcome the news that the government has taken this step to significantly fast-track their plans to scrap VAT on e-books . This is a boost to publishers, readers and authors which is especially important at this difficult time. We hope that it will enable more people to easily access and benefit from the comfort, entertainment and knowledge that books provide.

Owen Meredith, Managing Director, Professional Publishers Association (PPA) said:

Today's announcement is very welcome news and a much needed step. PPA called for the zero-rating announced in the Budget to be brought forward to the start of the tax year and I am pleased government has listened and acted.

In these exceptional times, consumers are increasingly hungry for trusted sources of news, information and analysis and turning to the pages of magazine media, both in print and digital. Ending the historic digital VAT penalty now is a benefit to consumers who are looking for trusted news and entertainment and a vital lifeline for publishers. As we all spend more time at home to stop the spread of this virus, subscribing to a magazine is a great way to keep entertained and indulge your hobbies and interests with trusted, quality journalism.

Jonathan Douglas, Chief Executive of the National Literacy Trust, said:

With schools and libraries now closed, it is vital that children and families are still able to access the life-enhancing world of books. Removing the VAT on digital publications will make this more of a possibility for families, for whom access to stories will provide much needed inspiration and comfort during this time of uncertainty.

Barbara Hayes, Deputy Chief Executive of the Authors' Licensing and Collecting Society (ALCS), said:

ALCS was proud to be a part of the successful Axe the Reading Tax campaign, which called for the scrapping of VAT on e-books to bring them in line with their printed counterparts. We're very pleased the Chancellor took note and has decided to bring this scrapping forward to tomorrow, which will ensure that e-books are more easily accessible and affordable for those who are currently staying home.

Isobel Hunter, Chief Executive, Libraries Connected said:

Since libraries closed their doors in March, e-Lending has boomed as people have turned to reading for education, entertainment and solace. E-memberships surged by 600% in the first week, and e-Lending has now trebled. Removing VAT from e-book licensing will help libraries to support children learning at home and to put more titles into readers hands at a time when they need them the most.

Nothing from Amazon or ComiXology yet, though we have asked. The news sits alongside British newspapers receiving up to £35 million in additional government advertising revenue as part of coronavirus communications campaign.

The £35 million extra advertising revenue will be split between local, regional and national print media, and will be a welcome boost to the media industry suffering from collapsing advertising spend in the private sector. These plans will be constantly reviewed over the next three months to ensure the campaign is as effective as possible. The government states that they recognise the vital role that media organisations, including newspapers, play in ensuring the provision of trusted, high-quality information and their ability to reach isolated and harder to reach communities, such as BAME and older communities. In light of this, the government states it has established advertising partnerships with the nation's favourite and most- trusted media titles, as a way of delivering important government communications on coronavirus. This has allowed the Government to leverage the powerful and familiar voices of over 600 national, regional and local titles across England, Scotland, Wales and Northern Ireland. It is estimated these partnerships will reach 34m people every day and 92% of adults in the UK each month.

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