Letter: Madness to put VAT on books

Sir: On the question of VAT on books, discussion has focused on the 'don't tax reading' argument. While I accept and support the moral and educational arguments, I believe there is a more practical and commercial reason not to impose VAT on books.

I am not a publisher by career, having acquired an ailing publishing house only three years ago. I arrived via consumer electronics. Over a period of some 10 years, I built a very successful business, manufacturing, in common with our competitors, all of our products in the Far East. No single piece of machinery of any genuine marketability was made in Britain. Worse still, no single component was made in Britain.

Upon entering book publishing, the contrast could not have been more stark. It is reasonable to claim that, if Britain is not the very best in the world in book publishing, it is certainly among the top few. There are 2,300 book publishing companies in the UK, in excess of 50,000 employees in the industry, and several times this number of associated freelancers.

Book publishing seems to be one of the very few genuinely thriving manufacturing industries in the UK. By thriving I mean that there is considerable activity generated in creating high quality products that compete favourably with those produced around the rest of the world. Unfortunately, I do not mean flourishing. Not many of these publishing companies are very profitable, and a very high proportion of individual titles are financially marginal. Indeed many small publishers struggle to survive.

The market will simply not sustain the introduction of Value Added Tax without a considerable falling off in demand. As so many titles are already marginal, reduced demand will make them unpublishable. This will be catastrophic to the economics of book publishing, with repercussions throughout the industry and all of its satellite industries.

Britain has more than pounds 1bn worth of exports of books and publishing rights, and every informed industrialist knows that exports depend crucially on a strong home market. Any reduction in the size of the home market will diminish the opportunity for export.

Even if this Government does not value the educational qualities of books, it should think very carefully about whether it is in the country's interests (and its own) to damage one of the few industries that is, sadly, left in Britain. It is absurd and perverse that this Government should consider seeking to destroy it. If it decides to introduce VAT on books, this will be a self-inflicted and irreversible act of recklessness and irresponsibility.

The irony will be that the anticipated additional funds projected from implementing the tax will not be forthcoming as the industry rapidly contracts.

Yours faithfully,

RICHARD SCHLAGMAN

Chairman

Phaidon Press

London, W8

10 November