Alain Miles

I may not have mentioned that I’m a senior member of the lobbying group, Fair And Responsible Taxation. Fully paid-up of course.

FART is deeply committed to the principle of taxation. How would countries and politicians stay in business without it? How would FART stay in business, come to that? Our flat 7.5% levy on all tax revenues collected keeps us fed and healthy, and has assured us of support across the political spectrum. Many of the world’s great statesmen have been FARTs.

But we also recognize that for a tax to be popular, it must appear to serve the common good. People are reluctant to see their hard-earned wealth redistributed unless it serves some greater cause, such as job creation, population control, or urban renewal. That’s why raising taxes to fight a foreign war is always popular – it meets all three of these criteria, as our splendid adventure in Afghanistan clearly illustrates. Spending on public health on the other hand always draws a groan. The public isn’t stupid; they know that the more people fit to work, the fewer job vacancies there’ll be; and if people start living longer, they’ll obviously consume more of the world’s natural resources and start clogging up our towns and cities.

I wouldn’t want you to get the impression that we’re only concerned with macro-economic issues. We have teams of experts constantly reviewing the fine details of tax legislation, always on the lookout for discrepancies, inconsistencies, and the opportunity to boost our income – which, with the logic of our fair levy, is also in the national interest. FART for the good of the nation – that’s our slogan.

As a novelist myself, I’ve been entrusted with chairmanship of our sub-committee for books and publishing, and I’d like to take this opportunity to present some of the latest FART thinking and open it to public debate. That’s the way things ought to work in a democracy, wouldn’t you agree?

In the UK, VAT is charged on ebooks but not on printed books – and in fact, right across Europe the ebook rate is higher. It’s a glaring anomaly and a very unpopular tax: search Google for ‘ebook VAT‘ and the words you’ll see headlined are unwanted, idiotic and Why? Why indeed? Most ebooks have the same content as their printed equivalents. So why should the consumer pay more tax on the version that doesn’t require us to cut down trees (or fuel transport or power warehouses and shops)? In our green-alert society, the ebook tax clearly fails the ‘common good’ test.

How did this come about? Blogger James Bridle suggests it’s because ebooks are classed as ‘electronic guides’ rather than books. Not so, James. Applying this logic, there’d be VAT on the print versions of cookbooks, car repair manuals, and Douglas Adams.

To tell the truth, some of our politicians were hoping that things would swing the other way. Remove the exemption for ebooks, they argued, and the public would come to realize how unreasonable it is to treat printed books as a special case. After all, it’s hard to argue that a book is one of life’s essentials like other zero-rated goods – food, children’s clothes, gold, and bingo.

Unfortunately, the politicians miscalculated: instead of demanding to pay more VAT on printed books, the public wanted to pay less on ebooks. So, for several months, FART was trying to find its way out of a hole. How could we make an unpopular policy popular, while still retaining our revenue stream? We were grateful when the EU took the heat out of the argument by ruling that from January 1, 2011, individual states could reduce the VAT on ebooks to match the rate for print – but at their own discretion. Knowing full well, of course, that no government worthy of the name would simply toss aside an increasingly important revenue source. January 1 came and went. Nothing changed.

Meanwhile, we were working away furiously behind the scenes, and I can now announce a solution that is fair, responsible and above all, consumer-friendly.

Our first decision was easy. Obviously, we had things the wrong way round. From the start there should have been VAT on printed books, while ebooks should have been exempt. Who today could argue with a tax designed to preserve our forests and woodlands? That’s socially responsible taxation. So our plan is to have printed books reclassified as ‘household furnishings’ – more accurately reflecting their status in a changing world. They’ll be taxed at the standard rate.

But that still leaves us with a problem. As sales of ebooks surge, so print sales are declining. If ebooks were zero-rated, our income from books would eventually dwindle to almost nothing, and the nation would suffer. Our solution, I think you’ll agree, is bold and breath-taking – a work of FART.

The original inspiration came from James Bridle’s post. Although his ‘electronic guide’ hypothesis was wrong, we liked the question it raised: when is a book not a book? Clearly it has nothing to do with the physical form. If a printed novel is converted to Kindle format, people still think of it as a book; but they don’t if it’s a guide or a set of instructions, whether in print or digital format. So the distinguishing feature must be content. We took the idea further. A set of instructions is self-evidently non-fiction. Suppose we made that the starting-point: that non-fiction should be taxable, but fiction not.

In purely economic terms this works. In the Kindle store, non-fiction books outnumber fiction by more than two to one, and the average price is considerably higher. With two revenue streams, print publications and non-fiction ebooks, we were confident that our VAT returns would give us – and the nation – a degree of comfort.

But there was still a nagging question. We’d have no problem selling the idea of taxing print books – all we needed to do was to roll out the old ‘dead tree’ argument. But how could we convince the public that taxing digital non-fiction was both fair and responsible. How could we make them enthusiastic to pay?

And then someone came up with a brilliant idea. What about a progressive tax, with ebooks rated according to the amount of fiction they contained? What if, as well as fiction and non-fiction, we introduced a third category – semi-fiction? After all, we agreed, the lines between fiction and non-fiction are increasingly blurred. Take Dan Brown’s novels, for example. How much of The Da Vinci Code is factual and how much fictional? Take the book I mentioned in my last post, Peter Bergen’s The Osama Bin Laden I Knew. Take my own novel, The Lebanese Troubles, for that matter. We sat down together to run the rule over my book, and found it to be 73.47% fictional (building in a 3% margin of error in case things which were not true at the time of writing may become true later, or vice versa).

Our plan is to tax books according to the percentage of factual detail they contain. Entirely factual? The full VAT rate will apply. Entirely fictional? Zero-rated. Semi-fictional, with a 70% fiction content? Consumers would pay 30% of the standard rate.

Will this popularize the tax? You bet your life it will … with this clever message:

The politicians among you will quickly appreciate the power and impact of the sentence. Here’s FART, serving the common good, promoting, preserving, curating one of mankind’s most precious assets – its imagination. And even as we take more from consumers (on the nation’s behalf), the emphasis is on taking less. It’s a lesson we encourage our politicians to learn: stop talking about what you plan to do; focus instead on what you’re certain you’re not going to do. It makes for less trouble all round.

So far, so good. But then we needed to consider the practicalities. If we’re going to tax ebooks on their fictional content, how exactly are we to measure it, and who’s going to do the measuring? What percentage of fiction would be allowable? How would consumers know whether they were reading fact or fiction? We turned for guidance to the EU, with its years of experience setting and maintaining the standards for consumer products. Particularly helpful was their legislation for milk products – whole milk, skimmed or semi-skimmed.

The first requirement is to set clear, measurable standards. Just as the European commissioners require whole milk to have a 3.5% butterfat content, so a book labelled ‘fiction’ would need to contain at least 90% fiction. Skimmed milk must be 0.3% butterfat; non-fiction would need to be less than 10% fictional. Semi-skimmed milk can be in the range of 1.5 – 1.8% butterfat; we’re more generous – semi-fiction books would be permitted to include 20 – 80% fiction.

You might be wondering what would happen to books with 10 – 20% or 80 – 90% fiction content. We’ve learned an important lesson from our friends in Europe: it’s important that there should be clear separation between the different categories of product, in case the consumer might purchase a semi-fictional book thinking it’s non-fiction. For this reason, we’ve proposed that the new legislation should not permit the sale of books with a fiction content outside the permitted ranges, no matter what the format.

Who would calculate the fiction content? With hundreds of thousands of book producers, the only workable solution is for the author to do it. We’ll need regulators and stiff penalties, obviously. How would we punish authors who tried to mislead their readers? One suggestion we’re seriously considering is to reclassify the author’s entire body of work, not as fiction, non-fiction or semi-fiction, but at literary fiction, virtually guaranteeing that his books would never be read again.

How will the scheme be consumer-friendly? Again, we’re following the trail of milk. Blue, green and red caps on a milk bottle tell the customer whether she’s buying whole, semi-skimmed or skimmed milk respectively. Similarly, writers will be required to color-code their ebook covers to indicate the percentage of fictional content inside. Consumers have a right to know what they’re buying.

And this is where we can put democracy to work, giving you a chance to add your voice to the world community of FARTs. Just answer this simple question. What color-code should we use for fiction ebooks? Let’s find out if your vote matches our decision. Leave your preferred color as a comment below, or if you’d prefer, text your answer to FARTCOLOR.

Coming soon: new FART proposals for skimmed reading.

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