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Reduced Value Added Tax (VAT) Rate on Books as a Tool of Indirect Public Funding in the Cultural Sector

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  • Katarzyna Kopeć

    (Faculty of Management and Social Communication, Jagiellonian University, 4 Łojasiewicza Street, 30-348 Kraków, Poland)

Abstract

The article concentrates on the relationship between reduced value added tax (VAT) rate on books and readership level as a projected goal in cultural policy. To figure out this complex link, the paper explores the contribution of public management and economy to this knowledge to uncover the potential of following assumptions: (1) Reduced VAT rate results in the fall in book prices for consumers; (2) lower book prices stimulate the demand for books; (3) higher consumption of books (book purchase) is reflected in a higher level of readership. Indirect funding is very often worth more (quantitatively) than a direct mode of subsidizing. Indirect instruments, including VAT reduction, are not always the simplest way towards a cultural policy target. Despite great potential as an indirect funding tool, the VAT reduction requires a high-quality ex-ante assessment, and mid-term evaluation to verify the effectiveness and consequences of using VAT as a tax exemption in the cultural policy.

Suggested Citation

  • Katarzyna Kopeć, 2020. "Reduced Value Added Tax (VAT) Rate on Books as a Tool of Indirect Public Funding in the Cultural Sector," Sustainability, MDPI, vol. 12(14), pages 1-14, July.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:14:p:5590-:d:383267
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    References listed on IDEAS

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    1. Vidar Ringstad & Knut Løyland, 2006. "The Demand for Books Estimated by Means of Consumer Survey Data," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 30(2), pages 141-155, September.
    2. Karol Jan Borowiecki & Trilce Navarrete, 2018. "Fiscal and economic aspects of book consumption in the European Union," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 42(2), pages 309-339, May.
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    5. Canoy, Marcel & van Ours, Jan C. & van der Ploeg, Frederick, 2006. "The Economics of Books," Handbook of the Economics of Art and Culture, in: V.A. Ginsburgh & D. Throsby (ed.), Handbook of the Economics of Art and Culture, edition 1, volume 1, chapter 21, pages 721-761, Elsevier.
    6. Throsby,David, 2010. "The Economics of Cultural Policy," Cambridge Books, Cambridge University Press, number 9780521868259, January.
    7. Mr. Alan A. Tait, 1991. "Value-Added Tax: Administrative and Policy Issues," IMF Occasional Papers 1991/011, International Monetary Fund.
    8. Schuster, J. Mark, 2006. "Tax Incentives in Cultural Policy," Handbook of the Economics of Art and Culture, in: V.A. Ginsburgh & D. Throsby (ed.), Handbook of the Economics of Art and Culture, edition 1, volume 1, chapter 36, pages 1253-1298, Elsevier.
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    Cited by:

    1. Renyan Mu & Nigatu Mengesha Fentaw & Lu Zhang, 2022. "The Impacts of Value-Added Tax Audit on Tax Revenue Performance: The Mediating Role of Electronics Tax System, Evidence from the Amhara Region, Ethiopia," Sustainability, MDPI, vol. 14(10), pages 1-22, May.
    2. Kristina Alekseyevna Zakharova & Danil Anatolyevich Muravyev & Vadim Vitalievich Ponkratov & Ekaterina Vladimirovna Degtyaryova, 2024. "Optimal Tax Trajectory of a Commercial Organisation: Economic and Mathematical Approach," Mathematics, MDPI, vol. 12(22), pages 1-16, November.

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