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 Full text 
Wednesday, 16 November 2011 - Strasbourg Revised edition

Modernisation of VAT legislation in order to boost the digital single market (debate)

  Marielle Gallo, author.(FR) Mr President, in the economic crisis we are experiencing, there is a definite need for austerity and balanced budgets. However, stabilising the public finances is only the first step. It is indeed indispensable, but it is a first step that must of necessity be followed by a second step, and that is the competitiveness of the European Union.

In order to think ahead, to guarantee economic growth, to maintain employment, we must act quickly. Achieving the objectives of the Europe 2020 Strategy is absolutely essential, as is fulfilling the goals of the digital agenda. We cannot afford to lay ourselves open to failure, as was the case with the Lisbon Strategy.

The digital economy has enormous growth potential. Information and communications technologies have sparked off a real revolution. In the United States, for example, sales of e-books now outstrip sales of printed books. In contrast, the European market is weak and fragmented, and this situation is partly attributable to indirect taxation.

Why is that? The current legal framework does not recognise digital cultural goods, because they are treated as supplies of services. If I take the example of a book, a printed book is subject to value added tax (VAT) of 5.5%, whereas an e-book is subject to standard-rate VAT, which is never less than 15%. I should add that, for the partially sighted, a category that comprises several millions of European citizens, the e-book is a genuine revelation and a revolution.

This fiscal discrimination is, therefore, prejudicial to the digital single market. I believe that the Americans understood this clearly, well before us, as President Clinton took the initiative in 1998 to impose a moratorium, which indeed he renewed three times, under which individual states were prohibited from imposing a higher sales tax on any electronic goods. The result, which can clearly be seen today, is that the digital market is completely dominated, precisely, by the Americans.

I therefore believe that the European Union must quickly mobilise the means to enable it to achieve these objectives and, specifically, this involves the introduction of a reduced rate of VAT for the whole category of digital cultural goods. In this way, we can obtain a reduction in the cost of the lawful supply of these goods. By cutting costs, we make these goods much more accessible to the public. This would also provide a much greater range of choice for European consumers. It is the way to combat piracy. In broadening the range of lawfully supplied goods and making them more accessible, we should clearly reduce the temptation to indulge in digital piracy. Moreover, countries’ tax revenues can only increase as consumption increases.

The final point I should like to emphasise is that the single digital market must benefit all Member States. In order to achieve this, I ask the Commission to bring forward the amendment to the place of supply rules for VAT, scheduled for 1 January 2015, to ensure that VAT is payable in the country of purchase of the goods, instead of in the country where the vendor is established.

I think that if we manage to implement at least these tax rules quickly, the digital single market is bound to develop. We are again way behind the United States, as I have explained, and I believe that we no longer have a choice. We must act today without fail and proceed with this alignment, so that we can avoid and finally do away with this discrimination against digital goods with a cultural content.

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