Fiscal and Economic Aspects of Book Consumption in the European Union

Discussion Papers on Business and Economics, University of Southern Denmark, 7/2015

30 Pages Posted: 18 Apr 2015

See all articles by Karol Borowiecki

Karol Borowiecki

University of Southern Denmark

Trilce Navarrete

Erasmus University Rotterdam

Date Written: April 17, 2015

Abstract

One of the available and yet underappreciated tools in cultural policy at the national level is the reduction of VAT rates for cultural goods and services. We document the standard and reduced VAT rates in EU-28 countries in the period from 1993 to 2013 and explore the underlying determinants. We further introduce a simple theoretical framework to explain how reduced fiscal rates are expected to decrease prices and increase quantities of the consumed cultural goods and services. We then estimate quantitatively that a decrease in the VAT rate for books by one percentage point is associated with an economically significant drop in the price by 2.6 percent. Finally, we show the positive effect of a fiscal rate reduction on the book expenditure of well-off households, where a one percentage point decrease in the VAT rate for books leads to an increase in expenditure by 2.7 percent.

Keywords: Cultural consumption, Book markets, Cultural policy, Value added tax, Fiscal policy

JEL Classification: H21, H31, I30, K34, Z11

Suggested Citation

Borowiecki, Karol and Navarrete, Trilce, Fiscal and Economic Aspects of Book Consumption in the European Union (April 17, 2015). Discussion Papers on Business and Economics, University of Southern Denmark, 7/2015, Available at SSRN: https://ssrn.com/abstract=2595576 or http://dx.doi.org/10.2139/ssrn.2595576

Karol Borowiecki (Contact Author)

University of Southern Denmark ( email )

Campusvej 55
DK-5230 Odense, 5000
Denmark

Trilce Navarrete

Erasmus University Rotterdam ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

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