EU faces pressure to lower VAT on music as lobby gathers strength. (International).

Pressure is mounting on EU ministers to reduce VAT on CDs as a cross-industry coalition of record labels, authors and composers, publishers, managers and retailers meets today (Monday 2) to step up their campaign for lower rates across Europe.

The coalition argues that it is unfair that recorded music is subject to VAT rates as a high as 25%, while other cultural goods and services benefit from rates as low as 5% or less. With VAT on sound recordings currently set at a minimum 15% rate across the EU, the UK applies a 17.5% rate while Sweden and Denmark have a 25% rate. Meanwhile, in the UK there is actually a zero rate on items including books, a category which includes products as diverse as sheet music and pornography.

As a result the coalition is pressing for music to be classified as a cultural good, arguing that reducing VAT on sound recordings would help revitalise the music sector, making music more accessible for consumers and increasing sales volumes. A review of the sixth VAT directive is expected in early 2003.

Organisations backing the initiative include international record company body IFPI, independents organisation Impala, retail association Gera, managers group IMMF, publisher bodies IMPA and ICMP/CIEM) and authors and composers group Gesac alongside the European Music Office.

Aim has already written to the UK government urging it to apply a lower VAT rate for recorded music, which would ideally see a harmonised lower rate for sound recordings across the whole of Europe. "A reduction in VAT will be a shot in the arm that the industry and the government needs to promote sales and exports," says Aim CEO Alison Wenham. "It will also make the UK and European independent sector stronger and ensure we ...