Slovakia targets ‘wealthy’ book buyers with steep VAT rise

Slovakia’s populist government has announced plans to drastically raise value-added tax (VAT) on books to help fix its public finances, drawing condemnation not only from booksellers and publishers but also far-right, pro-Russian propaganda groups seeking to circulate their ideas in print.

Announcing the new VAT rate this week, Slovakia’s finance minister, Ladislav Kamenický, claimed studies had shown that books were “primarily purchased by wealthier segments of the population” and could therefore be taxed at the new basic rate of 23% rather than the current rate of 10%.

The step is part of a general increase of the basic VAT rate announced by the coalition government headed by Robert Fico, aimed at addressing Slovakia’s excessive public deficit by raising €50m (£42m) in 2025. Under the proposal, basic food, medicine and textbooks would be exempt from the VAT rise or taxed at a lower rate than before.

The rate rises comes amid an increasingly aggressive stance by Fico’s government towards the culture sector, brought into the open by its dismissal last month of the directors of the country’s national gallery and national theatre.

If the tax changes get passed by parliament and come into effect in January, it would make Slovakia one of only two countries in Europe not to have reduced VAT rates for books – a measure whose intangible positive effects on the economy, education and democracy are mostly agreed to outweigh financial benefits.

Kamenický’s comments about the supposed affluence of bibliophiles have been greeted with derision in the central European country. On social media, Slovaks posted videos of themselves admiring the newly recognised financial assets on their bookshelves, to a soundtrack of Abba’s Money, Money, Money.

Juraj Heger, the chair of Slovakia’s Association of Publishers and Booksellers, questioned the finance minister’s claim that books were mostly bought by the well-off, saying recent surveys had shown only a marginal difference between the book-buying habits of high- and medium-income earners.

Higher VAT would also not help poorer book-buyers, he added, since it would probably result in higher book prices and mostly affect already struggling booksellers.

“People are very angry,” Heger told the Guardian. “The ministry of culture is destroying everything that has been built up over decades.”

“The book market in Slovakia is very small, making about €100m a year”, he added. “This decision will lead to people buying fewer books, so the government will only be able to raise very little money from this.”

Until now, Denmark has been a European outlier by levying books with as much as 25% of VAT, though the Scandinavian country compensates for the additional burden with promotional support and grant schemes for publishers.

All other countries in the EU make use of legislation that allows them to apply reduced VAT rates to book publishing. The average VAT on books in the EU is about 6%, and in some European countries – including the UK, Ireland, Norway and Slovakia’s neighbour, the Czech Republic – books are zero-rated for VAT purposes.

Latvia raised its VAT rate for books from 5% to the 21% standard rate at the start of 2009 but reversed the measure only eight months later, after lay-offs at publishing houses and a sharp decrease in sales.

Fico’s government has set a target of reducing Slovakia’s deficit from an estimated 6% to 4.7% of GDP next year. “Consolidation is, as the English say, ‘a must’,” the prime minister said on Tuesday.

The tax plans have earned Fico, an admirer of Vladimir Putin and Hungary’s illiberal leader, Viktor Orbán, criticism from the far right.

Roman Michelko, of the far-right Slovak National party (SNS), who chairs the parliament’s culture and media committee, compared the planned higher VAT on books to the policies of communist era Czechoslovakia.

The director of Torden, a publishing house specialising in anti-western, pro-Russian and conspiracy theory books, said the policy had revealed the “wretchedness and shallowness of the thinking of our government”.

Robert Merva, whose catalogue contains titles such as Putin’s Pilgrimage, Democracy is Total Nonsense and A Brief History of (Almost) Everything Paranormal, suggested the tax plan meant Fico’s nationalist government was in fact working “in the service of foreign interests”.