The draft of the Fiscal Strategy proposes an increase in the VAT rate from seven to 15 percent on books and daily and periodic publications, although many countries apply the lowest or zero rates for cultural and public interest items.

By raising the VAT rate more than double, book prices would rise by approximately eight percent, while print media publishers would need to increase their prices by the same percentage or match that increase in their revenue share.

In most EU countries, the publishing of books and print media is seen as a public interest endeavor, contributing to the educational and cultural growth of society and informing citizens, which is why several incentive measures exist, including the lowest or zero VAT rates.

Currently, there are three VAT rates: zero, seven, and 21 percent. This document now suggests a medium rate of 15 percent, which would apply to the previously reduced seven percent rate and a small category currently under the 21 percent rate.

According to the draft strategy, the government anticipates annual revenue of 60 million euros from the increase in VAT from seven to 15 percent, although the document does not specify how much might be generated from raising the rates on books and print media.

The government explains that the introduction of the intermediate VAT rate is intended to “compensate for the reduction in state revenues from salaries, which is becoming one of the most favorable tax systems for labor costs.”

This document also proposes reducing pension insurance contributions from the current 20.5 percent of gross earnings down to ten percent, which would enhance earnings by approximately five percent and provide employers with a 5.5 percent duty reduction. This change is expected to decrease budget revenue by about 180 million euros, prompting the government to consider other measures, one being the VAT rate increase from seven to 15 percent to offset that loss.

Publishers’ and bookstores’ associations, along with print media representatives, have urged various governments over the past year to implement a zero VAT rate on books and newspapers, citing declining sales.

In the draft media strategy presented in 2022, there was a proposal to reduce the VAT rate on press publications to zero. However, by the end of last year, the government adopted a media strategy that did not include this measure, arguing that tax rates could not be determined in this document but would instead be addressed in financial strategies. Now, an increase in taxes on these products is being proposed rather than a reduction.

The draft strategy suggests increasing the VAT rate by seven percent on books, printed materials, literature, articles related to science and art, tickets for museums, fairs, matches, as well as services related to the use of sports facilities for non-profit purposes and services offered at marinas.

Additionally, the VAT rate on solar panels and hairdressing services is to be reduced to 21 percent.

The VAT rate for all accommodation services in hotels, motels, guesthouses, and food and beverage services—excluding alcoholic drinks, carbonated, and non-carbonated sugary beverages, as well as coffee provided in catering establishments—will be set at 15 percent. Previously, the rate for most of these services was seven percent, with some at 21 percent.