(2004/C 84 E/0265)

WRITTEN QUESTION E-3122/03

by Nelly Maes (Verts/ALE) to the Commission

(22 October 2003)

Subject:   Reduction of VAT on CDs and cassettes

At the recent Ecofin Council in Luxembourg 7 October 2003, Commissioner Bolkestein announced that the Commission was against any reduction in VAT on audio recording media and CDs as this might create distortions of competition.

Against the background of the current discussions in Unesco concerning the creation of an international legal instrument to safeguard cultural diversity, will the European Commission examine whether a reduction in VAT is feasible and desirable for CDs by new artists and/or artists singing in local or regional languages and/or home-grown musicians (irrespective of whether or not they sing in their own language) and/or for certain genres of music?

Is the European Commission prepared to authorise some reduced VAT rates for CDs with the specific aim of safeguarding cultural diversity?

If so, what steps will the Commission take to bring this about in the near future?

If not, what measures does the Commission consider have higher priority in safeguarding cultural diversity?

Answer given by Mr Bolkestein on behalf the Commission

(21 November 2003)

The Commission adopted a proposal for a Directive on reduced VAT rates (1) on 23 July 2003. This proposal does not introduce reduced rates for CDs and other audiovisual media. Its objective is to improve the Internal Market through further simplification and more uniform application of VAT.

The standard rate of VAT (which ranges from 15 % to 25 %) currently applies to CDs and cassettes in the 15 Member States. After very careful consideration the Commission concluded that, in view of the divergences between Member States, the optional application of reduced rates for CDs and cassettes would inevitably have an adverse impact on the European Internal Market in a sector where the risk of distorsions of competition which would thereby be created is far from insignificant.

VAT rates have to be set in an objective way and different rates cannot be applied according to type of music, artist, language, etc. Such practices would be discriminatory and could call into question one of the basic features of VAT, its neutrality and objectivity. Consequently, VAT is not an appropriate instrument to promote certain genres of music and the Commission does not intend to propose that reduced VAT rates be authorised for CDs or cassettes.

As regards the creation of an international instrument to promote cultural diversity in Unesco, the Commission welcomes the unanimous decision taken by the Unesco General Conference on 17 October 2003 to begin work on a convention.

The Commission indicated its approval of the creation of such a legal instrument by Unesco in its Communication of 27 August 2003 (Towards an international instrument on cultural diversity) (2).

In addition, the Directive on television without frontiers (Council Directive of 3 October 1989 89/552/EEC (3) as amended by Directive 97/36/EC of the European Parliament and of the Council of 30 June 1997 (4)) contains several provisions which promote cultural diversity. In particular, it requires that, where practicable, broadcasters reserve a majority of their transmission time for European works, and at least 10 % of their transmission time, or 10 % of their programming budget, for European works created by producers independent from broadcasters.

(1)  COM(2003) 397 final.

(2)  COM(2003) 520 final.

(3)  OJ L 298, 17.10.1989.

(4)  OJ L 202, 30.7.1997.