Zambia’s re-introduction of 16% Value Added Tax on digital and newspaper sales is an affront to media freedom and should be reversed to save industry, interest groups have warned.
The 2022 budget for the fiscal year 2022 has re-introduced and passed an amendment to the VAT Act, adjusting the standard rate applicable to the supply of the e-newspaper and printing newspaper copies, a threat to the accessibility of the much needed information mediums.
The Media Institute of Southern Africa, a Southern African Development Community press watchdog, fears that unless the decision is reversed.
The action, it contends, would impact heavily on the newspaper industry, already facing possible extinction in the country spurred by the high cost of living which has encouraged low readership and threatens job security among practitioners.
MISA Zambia Chairperson Father Barnabas Simatende is cited by local media as having raised eyebrows at the review and re-imposition of VAT.
It warns of adverse effects on the industry, arguing the decision would increase the cost of production and might prompt closure of some of the media outlets while heavily impacting on the much espoused ATI and freedom of expression.
The media watchdog has since proposed special incentives to facilitate the growth of the industry unlike imposing taxes that were inimical to the growth of the already vulnerable sector which employs a considerable number of practitioners.
“MISA Zambia is concerned with the re-introduction of the 16% VAT by the Government on e-newspapers and newspaper sales and this will further reduce the already low sales of readership in Zambia,” argues Fr. Simatende.
“The Government should consider special incentives for the growth of the industry, instead of taxes on the already struggling media,”
John Mambo, an outspoken clergy lamented the new tax slapped on the newspaper industry and warned of serious effects on the industry, fraught with various challenges including the high cost of operations to sustain their businesses. He urged the Government to review its decision.
But Zambia Revenue Authority (ZRA), a state-run agency tasked to collect revenue on behalf of the Government under the supervision of the Minister of Finance defends the action. ZAR had an obligation to carry out policies that are set by the Government and cannot reverse without consent, says its spokesperson Tops Sikalinda.
Interest groups within and beyond Zambia have joined hands lobbying for the Government’s expeditious enactment of the ATI law to allow practitioners provide more data on the policies implemented by the Government which are restricted under outdated laws to allow people make informed decisions.
VAT is arguably collected on a product at every stage of the supply chain where value is added to it, from production to point of sale. Known in some countries as a goods and services tax (GST), it is a type of tax that is assessed incrementally.
In other parts of the world, the imposition of VAT has also raised concerns among players that fear the action could affect the readership and further consume into the revenue base of existing and deter potential publishers from joining the industry.
Last year, Chancellor Rishi Sunak had announced that a 20% tax on e-books and online newspapers, magazines and journals was to be abolished on 1 December. The decision would however, not apply to audiobooks.
According to BBC findings, the action had riled the Royal National Institute of Blind People (RNIB) that contended the decision was “disappointing”.
A letter calling for the tax to be axed was signed by more than 600 authors and presented to Parliament earlier in October. Physical books and periodicals are already exempt.
Earlier In October 2018, the EU allowed member states to drop sales taxes on electronic publications and many countries have already made the changes.
“The government expects the publishing industry, including e-booksellers, to pass on the benefit of this relief to consumers,” it argued in its budget.
RNIB’s head of social change, Sarah Lambert, said it was disappointing that the tax break was not being extended to audio books.
“Today’s change recognises the unfairness of taxing some alternative formats and will help widen access for blind and partially sighted people who use e-Readers.
“However, for many people living with sight loss, audio books are their preferred format and allow them to enjoy their favourite titles in the same way as everyone else. “
“It’s not right that they will continue to be charged 20% more for books and we urge the government to make sure that audiobooks are included in the exemption.”
Jim Waterson, media editor at the Guardian newspaper, estimated the move could benefit News UK – publisher of the Sun and Times papers – by £20m, if it kept the cost to consumers the same rather than passing on the saving to subscribers.
