Discussion Papers of Business and Economics
Department of Business and Economics, University of Southern Denmark
Karol J. Borowiecki
Fiscal and Economic Aspects of Book Consumption in the European Union
() and Trilce Navarrete
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; (follow links to similar papers)
JEL-Codes: H21; H31; I30; K34; Z11; (follow links to similar papers)
29 pages, April 15, 2015
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