MPs press for removal of VAT on audiobooks

Sir Mike Penning (Con), who obtained the debate, began it by saying that audiobooks are the only communication with the outside world for some people, particularly those with disabilities, and are vital for training, learning and education. He added that having 20 per cent VAT on every audiobook purchase put a burden on household income.

Penning asked the Financial Secretary, Victoria Atkins, whether the Equality Act 2010 protects people who need to use audiobooks from discrimination, as they have to pay 20 per cent VAT to read, while the rest of the population, who can read visual books, do not have to pay.

Marion Fellows (SNP) highlighted the fact that the young generation especially enjoy audiobooks, and, for some, it’s their first access to literature. Penning agreed.

He added that, “it cannot be right that there is legislation on the statute book—the Human Rights Act, the Equality Act and other European Acts—that states that we should not discriminate, and yet we are still in a situation in which someone who wants to improve their life for whatever reason is, by no choice of their own, penalised by our tax system. I am sure that the Minister will probably say that this is very complicated, and I know what her brief will say, because it is not dissimilar to the briefs that were given to me when I was sitting in that very chair. But because something is difficult, it does not mean it is right to do nothing about it.”

Penning observed that families with a special needs child who buy audiobooks are not able to claim VAT back, although some organisations might be able to. He said that, “for the public to have trust in our taxation system, it has to be fair and proportionate, and, in the public’s eye—because we are spending their money on their behalf—it has to be right and proper”.

He concluded: “ Things get left out when you are in government, and you think, “I wish I had done that.” I am leaving this House whenever the next general election comes, and I do not want to leave with a few things still on my bucket list that I wish I had done more about, perhaps when I was the Minister. I wish I had kicked harder when I was the disabilities minister, particularly against my Treasury colleagues, so I am going to kick now for people who are suffering this 20% tax through no fault of their own, which surely has to be morally and ethically wrong.”

Speaking next, Marion Fellows also expressed concern over VAT on audiobooks, saying that it is “really important that people with visual impairment, dyslexia or other medical conditions that require them to read in a different way are not excluded”. There are real issues in trying to circumnavigate who is eligible for some kind of exemption, she continued, so the minister should “make it a universal exemption”.  “The tax should be gone, because accessing literature is important for everyone”, she proclaimed.

Elaborating further, Fellows noted that, according to the National Literacy Trust, two in five audiobooks listeners are children. As such, reducing VAT on audiobooks is important to make sure that the younger generation continue to listen to books.

Fellows asked the minister a question put forward by the Royal National Institute of Blind People: what is the cost of extending the VAT exemption to those who are blind, partially sighted or have print disabilities? And how much would it cost to just remove the tax entirely, she added.

The Shadow Financial Secretary, James Murray (Lab), pointed out that audiobooks offer a great opportunity for visually impaired and dyslexic people to continue working independently and contribute to the economy for longer. Furthermore, “recent technological changes are raising questions over how the tax system across the board adjusts to a more digital world”. Murray acknowledged that expanding the scope of VAT is complex and could add pressure to the public finances; nevertheless, he was keen to hear the minister’s response on this matter.

Christine Jardine (Lib Dem) argued that the educational value of audiobooks goes beyond schools and VAT on audiobooks also obstacles those elderly people who can no longer read.

Victoria Atkins, the Financial Secretary to the Treasury, responded to the debate for the government. She highlighted various programmes and schemes that the government has founded to help young people at school and noted that £8.7 million has been allocated in this academic year to support schools in purchasing complete systematic synthetic phonics programmes for the curriculum.

Turning to VAT she said that it “is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services”. She added that the government had cut the VAT on certain digital publications in the March 2020 Budget to support literacy and reading in all its forms, and to make it clear that e-books, e-newspapers, e-magazines, and academic e-journals are entitled to the same VAT treatment as their physical counterparts.

“The extension of the zero rate of VAT to e-publications was introduced to tackle the inconsistency of approach between certain physical publications and their digital counterparts,” explained Atkins, “so that there is a mirroring between the two; if a publication in physical form has a zero rating, then in digital form it now has the same exemption”. There is no such inconsistency in relation to audiobooks, she argued.

The Financial Secretary said that any VAT exemption would come at a cost to the Treasury and it would be difficult to target. She promised to answer Fellows’ questions in writing.

Continuing, Atkins said that there is no guarantee that the benefit of any VAT exemptions would be passed on to the consumer in the form of lower prices. Reiterating that VAT is the third largest tax in the UK (in terms of yield) and helps pay for public services, Atkins said the government has “to look very carefully at every request to change or tweak the VAT system, or to use it to meet the laudable aims and concerns of colleagues from across the House”.

"Some might say, “Hang on a minute; if the Government have imposed the VAT cut, why can’t they force businesses to pass on that cut?” We set the tax framework, and businesses must operate within it, but if a business chooses to absorb that tax relief as profit, rather than pass it on to consumers, that is a commercial decision taken by the business,” she explained.

Concluding her remarks, the minister said that the government “believe that the measures that we continue to take to support reading are the best way to target our resources”. She said she was “sorry that I am not able to give quite the news that my right hon. Friend was hoping for, but I look forward to discussing the matter with him in future.”

You can read the full debate here.