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Austerity tax could 'kill off' French bookstores

AFP | 5 Apr 2012, 07:53

France's small bookstores have survived the rise of big chains, Amazon and digital books, but many fear a sales tax rise, part of the debt-saddled government's austerity plans, could push them out of business.

 

 

Until now the thousands of independent booksellers that dot France's town centres offered the best of both worlds - a quaint setting, one-on-one tips and advice, and guaranteed prices as low as at a chain store.

Since 1981, the French state has set the price of books, largely to support independent bookstores which are seen as vital assets to local communities.

But President Nicolas Sarkozy's right-wing government, fighting to get public finances under control, has hiked the sales tax on books from 5.5 percent to seven percent, under measures that took effect on April 1st.

With the French presidential campaign in full swing ahead of the April 22nd first round, the question has turned political with Sarkozy's Socialist rival Francois Hollande vowing to repeal the rise.

Booksellers see the tax hike, part of measures aimed at saving a total of €72 billion ($95 billion), as a stab in the back.

The government has "loaded the bullet designed to kill off independent booksellers," charged Vincent Monade, a former bookseller and head of the Paris region's Observatory for Books and Writing (MOTif).

Unlike the United States for instance, where bookselling has become the preserve of big business, France has one of the densest networks of small bookstores in the world.

Across its 2,500 to 3,000 professional bookstores -- compared to just over 1,000 in Britain -- literature-loving staff will often stick little notes to titles with their own short comments or reviews.

"What we love is to share the books we have enjoyed," said Valerie Fournier, of the Librairie du Rivage, in Royan on the French Atlantic coast.

Guillaume Husson, the head of the SLF booksellers union, told AFP that the VAT announcement was a "shock" to booksellers, already hurting from the rise of online vendors, soaring property rental rates, and, now, digital books.

"It's taking a big risk, for what amounts to a drop of water in the state coffers given the size of the national debt," which stood at almost €1.7 trillion at the end of the third quarter of 2011.

On that scale, says the SLF, the sums generated by the extra book tax, estimated at €60 million at most, are a drop in the ocean -- and yet the effect for bookstores could be disastrous.

Across the French book sector, the average profit margin is 0.3 percent of turnover, according to a May 2011 study by the SLF and the culture ministry.

Given the millions of titles booksellers already have in stock, the SLF fears the VAT rise will eat into their wafer-thin profit margins and push many out of business.

"A majority of booksellers would end up in the red and threatened with closure," said the SLF.

A group of leading lights in the French book world, led by a Paris bookstore owner, has spoken out against the VAT rise.

"This bad measure will destroy the diversity of France's book landscape," said their open letter in the Livres Hebdo weekly, warning of the "incalculable cost of the bankruptcies" that could ensue.

"VAT is a major political issue," said Husson, whose union has been lobbying all the presidential candidates for a super-low VAT rate on books, a system that already exists for the French press.

Booksellers and publishers argue that cultural goods should be exempt from the VAT rise -- on a par with essential goods like food staples.

The French publishers union, the SNE, points out that VAT on books stands at four percent in neighbouring Spain, and at zero in Britain and Ireland.

Worldwide, books are exempt from sales taxes in at least 21 countries, according to a 2011 study by PricewaterhouseCoopers.

The culture ministry has admitted France's bookstores are in crisis but, says Renny Aupetit, a bookseller from eastern Paris, it "was overruled by a coup d'etat from the finance ministry".

Culture Minister Frédéric Mitterrand has set up a crisis committee on the VAT issue and the broader challenges facing the sector, which is to report back at the end of the first quarter.

 

 
 

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