European Artists Back Labels On Vat Cuts

More than 250 European artists, backed by various music industry bodies, have signed a petition urging the European Commission (EC) to reduce the VAT (value-added tax, or sales tax) on recorded music across the European Union to the lower level enjoyed by other "cultural goods," such as books.

A campaign by the record industry in Europe to reduce VAT has been gathering momentum during the past two years. Labels body the International Federation of the Phonographic Industry (IFPI) and independent labels association Impala are among several trade groups to have added their names to the artists' petition.

Greek singer Nana Mouskouri, a former member of the European Parliament, has sent a letter with the petition to all 20 members of the EC, which serves as the executive body of the EU. In her letter, Mouskouri claims that the current VAT rates mean there is effectively an unfair tax bias against music in Europe.

"Why," she asks, "should music be discriminated against in comparison to other cultural products that currently benefit from reduced VAT rates, such as newspapers and magazines, as well as entrance tickets to cinemas, theatres, and zoos? The talent of European artists is the driving force behind a dynamic creative sector that has gained recognition throughout the world. A VAT reduction on recorded music would increase access to culture for everyone, particularly young people."

Among those who have signed the artists' petition are such major European artists as Andrea Bocelli (Universal), Laura Pausini (Warner), and Johnny Hallyday (Universal).

The letter came as the commission enters a period of internal consultation on EU VAT regulation, with all its departments commenting on any proposed revisions. VAT on music currently ranges from state to state, at between 15% and 25%. The record industry and the artists' coalition want this brought closer to the 5% minimum rate carried by other cultural products.

Commission officials remain cautious about the chances of the lobbying resulting in a recommendation to cut VAT on music. One official says, "We have to look at a number of factors, and at this stage, nothing can be guaranteed."

The final approval on any reduction would have to be made by EU finance ministers, who are set to discuss VAT revision either at their scheduled June 3 meeting in Luxembourg or at a July meeting in Brussels.