Publishers in the easternmost province of Newfoundland and Labrador are upset after learning that books will no longer be exempt from the harmonized sales tax (HST). Beginning in 2017, the tax on books in the region will jump from 5% to 15%, leaving a number of local publishers worried that the increase could negatively impact their bottom lines.
The news came as an unexpected addition to the province’s 2016 budget, presented by provincial finance minister Cathy Bennett last week. The budget also included planned raises in personal income tax and dozens of new fees.
Consumers in Newfoundland and Labrador, a small province of about 500,000 people, currently pay the 5% federal tax on books that is standard across the country. By removing the tax exemption for books, the province is the first in Canada to charge the full HST, which the new provincial budget has raised from 13% to 15%.
Local publishers have expressed concern that the extra tax could lead to fewer books being sold in the short term, and even fewer books being published in the long term.
“If publishers are taking in less revenue, then they have to make decisions as to how many books they can afford to publish per year,” said Donna Francis, editor and marketing manager at Creative Book Publishers in St. John’s, the capital city. “[Fewer] book published by us means fewer Newfoundland writers who are getting out there, fewer Newfoundland stories.”
Jim Cormier, Atlantic director of the Retail Council of Canada, is working on an appeal about reversing the decision.
“You’re talking about the cultural heartbeat of this province,” said Cormier. “I can forgive [the government] to an extent, as they were dealing with so many other issues with this budget. But now it’s time for them to understand that this is a problem, and the amount of tax they’re going to get out of this is negligible versus the huge financial challenges that they have.”
This isn’t the first time a Canadian province has fought to keep this tax exemption in place. The Atlantic Publishers Marketing Association successfully prevented the same thing from happening in Nova Scotia last year, and in Prince Edward Island in 2012. Now the APMA is helping organize a campaign against the tax.
“It will have a detrimental effect on the whole industry and on literacy,” said APMA executive director Carolyn Guy. “The industry has enough challenges without having to deal with an increase of that magnitude.”
