VALUE added tax on books hampers literacy in South Africa.
This is the Democratic Alliance's argument on why VAT on books should be revised. Under current legislation, all books are subject to the standard VAT of 14percent.
"The DA believes that a tax on books is a tax on learning, knowledge and literacy. Right now we need to prioritise measures to promote literacy and education, and we believe that a zero-rating on books would be a cost-effective measure to contribute towards this," Dion George, the DA's shadow minister of finance, says.
George argues that South Africa lags behind the rest of the world in tax policy on books. In many countries - including Australia, Brazil, Ghana, Ireland, Kenya, Mexico, Norway, the UK and the Philippines - no tax is charged on books. Elsewhere, the debate centres on just how low the reduced rate should be, rather than whether the full rate should still apply.
"Most of these countries adopt a far reduced tax rating on books in the range of four to five percent. Comparative research has also shown quite clearly that reducing the cost of books, by reducing VAT charged on them, has a powerful effect on the purchase of books and readership," George says.
He says there are three options - a zero VAT rate, a VAT exemption or a reduced rate.
"The distinction between zero rating and exemptions is a matter of whether a vendor can recover input tax on expenses incurred in the course of making the sale. Reduced VAT rates are commonplace in most developed countries," he says.
George says the loss to the fiscus would range between R169million and R274million.