BULGARIAN BOOK RELATED LEGISLATION ISSUES
Ladies and Gentlemen,
Dear
Colleagues,
There
is no specific legislation in Bulgaria
related to the book, the book industry and the book sector. There are laws and
regulations by the Council of Ministers, related mainly to the economical
issues of the book.
The
UDF government adopted the currency board policy as the only alternative to the
economic chaos in the recent 5-6 years. It managed to stabilize the Bulgarian
lev and made the economic results in the production and trade areas more
predictable. This made possible the adoption of a stricter tax policy, which
naturally resulted in higher tax collection rate even at the end of the first
year. Part of the “shade economy” was forced to come “out of the dark”. This
strategy undoubtedly led to a healthier national economy and created
possibilities for revitalizing of certain sectors.
In
the book sector, though, the “revitalization” was too short. The increase of
the average discretionary income of the population went together with an
increase of the average living expenses and this forced its cultural needs way
back in the list. Simply put, when there’s barely enough money for bread and
medication, the book is turned from a necessity into a… dream.
It
is a well known fact that there is not bad or good legislation as such. There
is legislation, which is adequate or inadequate, stimulating or hampering the
development of one sector or another. After the economic and legal anarchy,
which the UDF government inherited, it is only natural for the productive
development towards proven European practices and models to pass through several
phases, first being the “rehabilitation”. The adoption of a degree of financial
discipline, equal for all, is undoubtedly the first most important step. The
government made it decisively and achieved the predicted economical effect. But
the program for economical rehabilitation affected all the economical subjects,
regardless of what they needed – “rehabilitation” or “stimulation”. The common
economic delimiter for everyone – producing from toilet paper to encyclopedias
– without making it easier for the former, makes it extremely hard for the
latter, that is the publishers. Alas! – all around the world the toilet paper
is used more widely and more often than the encyclopedias! In the ridiculous
absurdity of this example are enclosed the issues of the current book related
legislation in Bulgaria.
Both,
the manufacturer of toilet paper and the manufacturer of encyclopedias, that is
the publisher, are taxed with:
- VAT
– 20%;
- Income
tax – 32% or 36% if below or above 5000 DM respectively;
- 5%
customs duty, if the product is imported;
- 2%
temporary import tax.
Until
the book in Bulgaria
is regarded only as a product of the economy, there is a clear possibility for
the book production, which created itself regardless of the lack of any state
support after the democratic changes, to wither and die. At present about
150-200 publishing companies manage to maintain their publishing profile as
primary, but in extremely hard circumstances.
The
value-added tax in fact is killing the publishing business. I don’t have to prove
it to the experts here – higher book prices, less demand, almost non-existent
discretionary funds, and lack of re-investment opportunities and business
expansion. More frightening is the fact of bringing the book to the level of
any other product, which has a priori greater demand or higher price, which
unavoidably de-legalizes the publishing business. The publishers, driven by
economical forces, do not declare all sales, not paying the VAT due, in effort
to save some discretionary funds. Others go even further – they sell undeclared
print runs, on which they are paying neither VAT, nor income tax, etc. The
chain reaction of law violations is more serious, when the actors in the trade
are more unidentified, and in Bulgaria
today the street book selling has replaced almost entirely the defunct once
well-organized and working centralized book trade system. It won’t be easy for
the state to collect its taxes from the street vendors, who, for logical
reasons, are not equipped with cash registers with tax memory. The state hardly
would be able to track the sales of publisher’s titles, respectively the VAT
due. This actually makes the VAT meaningless, because the chain
“publisher-printer-bookseller-customer” has been broken. The state would
benefit much more economically from zero or reduced VAT rate of 4-5%, because
the tax (if there is any) will be much more collectable, and if there is none,
it will provide at least::
- accumulation
of funds in the book publishing business;
- new
employment opportunities;
- trade
discount increase up to 40% (now the highest is 30%), which will provide
booksellers with funds to open bookshops – to buy or lease them;
- total
legalization of the book publishing business – timely payment of the taxes, due
to the need of the necessary investments;
- gradually
raising the price of the book, respectively providing for the needs of
reproduction and profit of the book industry.
Book
publishing in Bulgaria
today is almost entirely in private hands. The Bulgarian publishers today are
economically independent and they don’t want state charity. But this doesn’t
mean that the state has to turn its back at its long-term interests for the
sake of the short-term positive results of the reform. The results in Poland after
the removal of VAT for the books are more than encouraging for every reformer
with a vision for the future. Books in Poland after the removal of VAT
never lowered their prices, but returned to the bookshops, raised their
print-runs while the publishing and book-selling companies legalized their
activities eventually. Even a rough comparison between the VAT rates in
countries with almost the same population (about 10 million) like the Czech Republic
and Hungary
makes it obvious that the book industry is developing better at lower tax rate.
In the Czech Republic
the VAT on books is 5%, in Hungary
it is 12%. In 1997 in the Czech Republic 11 519 titles are published compared with
9343 in Hungary.
A translator in the Czech Republic is paid 100 USD for an author’s sheet
compared with 85 USD in Hungary.
And if we look at Poland,
the translator’s fee is twice that of its Hungarian colleague – 170 USD. But in
Poland VAT is 0%!
Similar
is the situation with author’s fees – lower VAT rate on books makes it possible
for the publisher to pay higher royalties.
In
Bulgaria
today 20% is the VAT on the royalty fees also. And with countries with which we
don’t have a non-double taxation agreement – USA is one of those – the
publisher is required to calculate 15% tax on the royalty fee and to deduct it
in favor of the state. Moreover, royalties are treated by the tax authorities
as a long-term investment and with this regard are not tax-deductible. The
amount of royalties is “spread”, figuratively speaking, over the term of the
contract – 1,2 or 3 years.
Bulgaria has ratified the
Florence Agreement, but – as David Kingham rightly states – there are “problems
with its interpretation and implementation”. In 1998 the Council of Ministers
issues a Regulation on the ways and means to implement the Florence Agreement.
Unfortunately, the spirit of the Agreement is not understood, since in its part
related to the books it states that the reading and knowledge should not be
taxed. In article 7 of the Bulgarian regulation it says:
The objects under
article 1, part 1 and 2 can be sold, leased or let only after written approval
issued by the authorities under article 3 and payment of the respective duties,
fees with equivalent effect and taxes.
Even
at such short glimpse at the Bulgarian book related legislation, it is quite
obvious that it needs some changes to be harmonized with the legislation of the
European countries. Unfortunately the claims of the book community before the
government for a change in the VAT law and for a reduction of the rate down to
5% yet remain unheard. The First National Conference for the Book held at the
end of 1998 in its closing statement proposed to the Minister of Culture to
head a National Council for the Book, in which responsible authorities from the
executive and the legislative branches will be also present. It remains for the
Council to work out a long-term national program for the book, as well as to
propose to the government and the Parliament changes to the current
legislation, designed to lower the economical burden on the Bulgarian book and
to make it more accessible.
In
the mid June, within the days of the European Month of Culture, the Council of
Europe, the Ministry of Culture, the National
Book Center,
the Bulgarian Publishers’ Association and the Bulgarian Writers Association are
to organize an international conference on the current situation and the issues
of the Bulgarian book policy. There, a framework of a future Law for the Book
is to be proposed for a wide public discussion. The preparation of this
conference already started and it is our hope for it to have the desired by the
whole book community in Bulgaria
social effect.
SVETLOZAR ZHEKOV
Director of the National
Book Centre
With the Ministry of
Culture
Of the Republic of Bulgaria
Review of
the national book policies, Council of Europe, Strasbourg, 1999.
new online casino
|
