French Industry Reacts To Minister's VAT Stance

Patrick Devedjian, the French minister for industry, has controversially suggested that the music industry’s ongoing fight to reduce VAT on CDs is a waste of time.

Patrick Devedjian, the French minister for industry, has controversially suggested that the music industry’s ongoing fight to reduce VAT on CDs is a waste of time.

Speaking to daily newspaper Le Parisien, Devedjian is quoted as saying, "the CD is an outdated format. Defending it is tantamount to fighting an already lost battle. Besides, when VAT was last lowered from 33% to 18.6%, consumers only paid 8% less."

IFPI-recognized trade organization SNEP said in a statement that it was "surprised" at the minister's declaration, given that the French president Jacques Chirac, prime minister Jean-Pierre Raffarin and both the former and current culture ministers have backed the industry's battle to lower VAT.

France has led calls for the European Union to reduce the rate of VAT on CDs. VAT on sound recordings is currently set at 15%-25% in Europe, while other cultural goods carry rates as low as 5%. However, such a reduction could only come about with unanimous EU approval.

In a statement, independents' body UPFI said Devedjian's comments "negate the cultural specificity of music and ignore the fact that a VAT drop would help the fight against piracy by making music available to the greatest possible number."

Devedjian said he was monitoring CD prices and urged labels to invest in new technologies to distribute their music in a cheaper manner. Both organizations cited a report from the national statistics body INSEE, which states that whilst cinema ticket prices have multiplied by seven since 1970, record prices have only doubled.
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