Music Industry Lobbys EU For Level Playing Field On VAT

by Ulrika Lomas, Tax-News.com, Brussels

10 October 2003

Music industry executives and artists joined hands earlier this week in an attempt to persuade the European Union to reduce the level of VAT charged on compact discs to the lower rates levied on other forms of media and cultural items.

Under current EU law, VAT on items such as books and cinema tickets is levied at reduced rates whereas musical recordings attract a standard rate of value added tax which is often far higher.

"There is real discrimination between music and all other forms of expression," said French electronic muic composer Jean-Michel Jarre, one of the leading exponents of the music industry's campaign. Jarre pointed out that VAT on items such as books and theatre tickets was around 4.5% though the average rate for CDs was around 20%.

Entertainment retailers have also weighed into the debate, recently presenting European lawmakers with a petition containing 140,000 signatures from individuals who believe VAT on CDs should be lower. However, legislators are likely to be sceptical of the retailers' motives and fear the reductions will not be passed on to the consumer.

Nevertheless, Philippe Person from the Global Entertainment Retail Association countered that the bulk of the reduction would be passed on to consumers and claimed agreements are in place that will pass on the savings in full for a period of three years.

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