European Artists Launch Campaign for Tax Cut

For years, compact discs in Europe have been subjected to higher sales taxes, known here as value-added tax (VAT), than books, movies and other cultural commodities. With slumping sales and the increasing threat of piracy over the Internet, musicians would like to see that changed.

A petition signed by 1,200 prominent European music artists and submitted to 20 European Commissioners in Brussels on Tuesday by German songwriter Rolf Zuckowski and Belgian pop star Alex Callier of the group Hooverphonic claimed that disproportionately high taxes on recorded music within the European Union are choking sales. Other signatories to the petition included international music giants Andrea Bocelli, Elton John, Julio Iglesias, Nana Mouskouri, Chris de Burgh and Johnny Hallyday.

Alleged discrimination

The artists are demanding that their music be classified in accordance with other cultural products like books, newspapers or movie tickets, which are subject to lower taxes.

"It’s unjust that the state imposes higher taxes on CDs and records than audio books or books," Zuckowski said. "We have the most incredible range of music in Europe, from Scandinavian pop to German classical and British rock. A VAT reduction would protect Europe’s cultural diversity and would give young musicians a chance again," he said.

In Germany, the 16 percent VAT applies to CDs and records, while so-called "socially necessary" cultural items such as books, magazines and movie tickets are only taxed by 7 percent.

The German model is standard practice in Europe, which follows EU VAT directives stipulating that VAT rates on CDs should be between 15 and 25 percent. However, Germany's 16 percent VAT rate is relatively low when compared to Britain or Scandinavia. The British pay 17.5 percent of VAT, while Danes and Swedes pay the maximum 25 percent.

Belgian singer Callier put the issue in perspective in an interview with the BBC. "When someone buys a biography of Jacques Brel (legendary French singer) in Belgium, he pays a VAT rate of 6 percent, but if he buys a CD of his music, he has to pay 21 percent. This makes no sense and does not recognize the cultural role of musical artists," he said.

Slashing VAT could bolster struggling music industry

A recent five-country survey for the International Federation of the Phonographic Industry (IFPI) found that VAT reduction could significantly boost a music industry plagued by declining sales and widespread piracy.

The survey said 60 percent of people over the age of 16 would buy more CDs if they were cheaper. The survey also suggests that increased CD sales would compensate governments for any loss of revenue from a VAT cut within one or two years. The study also concluded that if VAT was significantly lowered, Italy could see a rise in music sales as high as 160 percent while Britain could see sales jump to a whopping 110 percent.

The European Commission is currently considering changes to the EU’s system of taxing cultural goods as part of a review of VAT directives. However any change would first have to be approved by all EU finance ministers.