Abstract
The article concentrates on the relationship between reduced value added tax (VAT) rate on books and readership level as a projected goal in cultural policy. To figure out this complex link, the paper explores the contribution of public management and economy to this knowledge to uncover the potential of following assumptions: (1) Reduced VAT rate results in the fall in book prices for consumers; (2) lower book prices stimulate the demand for books; (3) higher consumption of books (book purchase) is reflected in a higher level of readership. Indirect funding is very often worth more (quantitatively) than a direct mode of subsidizing. Indirect instruments, including VAT reduction, are not always the simplest way towards a cultural policy target. Despite great potential as an indirect funding tool, the VAT reduction requires a high-quality ex-ante assessment, and mid-term evaluation to verify the effectiveness and consequences of using VAT as a tax exemption in the cultural policy.
Highlights
Balancing the funds for culture projects from various sources becomes an important task of the state, which recognizes the need for optimal organization of the cultural sector as well as the need for broad, deliberate stimulation of culture demand with various instruments of directing taxpayers’ behavior
Q2: Does reduced value added tax (VAT) rate result in the fall in book prices for consumers? Q3: Do lower book prices stimulate the demand for books? Q4: Is higher consumption of books reflected in a higher level of readership?
In order to find out about the correctness of the correlation between the preferential VAT rate and the level of readership, one should analyze the potential of partial assumptions: (1) A reduced VAT rate has an impact on lowering the prices of books for the final consumer; (2) lower prices of books for consumers result in higher demand for books; (3) higher consumption of books is reflected in a higher level of readership
Summary
Balancing the funds for culture projects from various sources (public-direct and indirect, non-government and private—from companies or private entities) becomes an important task of the state, which recognizes the need for optimal organization of the cultural sector (supply side) as well as the need for broad, deliberate stimulation of culture demand with various instruments of directing taxpayers’ behavior. Within the concept of a sustainable approach to shaping public policies it is thought that the public sector contributes to social well-being, and the civic sector, as well as the private or informal sector (e.g., family, social groups, friend groups). The joint and sustainable functioning of various entities and sectors in culture, distinguished by different norms, values, and principles, including the methods of financing their activities, can be a way to achieve social goals, and in a narrower sense cultural ones [1,2]. Despite the significant impact on the state budget, tax expenditures remain non-transparent, and they are not subject to cost-benefit analysis or cost estimation as part of these benefits [4]
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