Spain’s arts and entertainment sector faces “disaster” as a result of the government’s decision two years ago to apply a 21-percent sales tax to movie, concert and theater tickets, according to an open letter from industry representatives presented to Prime Minister Mariano Rajoy last week.
The letter, which pointed out that the sector contributes four percent of Spain’s gross domestic product, and employs some 150,000 people in 4,000 businesses, was delivered to the offices of the ruling Popular Party by a delegation of five representatives of the 14 nationwide federations that make up the Union of Culture Industry Business Associations on July 18.
Sales tax, or VAT, was raised from eight to 21 percent in September 2012. Since then, say sector representatives, there has been a 30-percent drop in cinema, theater, concert and dance attendances, along with a “drastic reduction in the ability to produce new content, one that will be difficult to recover from, and that has badly hit businesses, which are closing down: exposing the total uselessness of a measure that is as absurd as it is destructive.”
The sector is accusing the government of needlessly targeting it: Spain is alone among EU nations in imposing such a high level of sales tax on the arts. In France the figure is five percent; in Greece, nine percent, and 13 percent in Portugal. “This shows that it isn’t Brussels that is dictating taxes; countries that have been bailed out by the EU have not been required to hike sales tax in this area: the government has no excuse,” continues the letter.
The five-member delegation was made up of Ramon Colom, the president of FAPAE, which represents film producers; Jesús Cimarro, president of FAETEDA, which represents theater and dance companies; Juan Ramón Gómez Fabra, president of FECE, the body that represents cinema owners; Pascual Egea, president of the APM, the association of music promoters; and Emilo Santamaría, president of ARTE, which represents sound and lighting companies.
Spain is alone among EU nations in imposing such a high level of sales tax on the arts
Gómez Fabra says that 61 movie houses closed last year, with the loss of 212 screens, while box office takings fell by 22 percent on the previous year, and 12 percent of jobs were lost over the same period. “We have been hit first by piracy [unauthorized downloading of films from the internet], and now by VAT. We could have dealt with a two-percent increase, but 13 percent has been too much. The situation is very worrying. The secretary of state for finance, Miguel Ferre talks about us insultingly, while the culture minister is nowhere to be seen. For the sake of €60 million in extra tax revenue in the case of movie theaters, they are killing any future we might have.” Cimarro says that the industry expects the tax to be lowered between now and September, reminding the premier that that the heads of the regional governments of Madrid, Extremadura, and Castilla y León have publically supported calls for the sales tax on the arts sector to be reduced, and that the deputy prime minister has said that a reduction is being looked into.
“It’s easy to destroy, but building is hard work, and we are looking at a bleak arts scene for decades to come,” says Colom, adding: “This country has significant cultural potential, but we are being marginalized and punished. We are paying for a crisis that is largely the responsibility of our political representatives.”
You can’t compare going to see a work by Lope de Vega with buying a fur coat”
The letter sent to the prime minister did not say what the arts industry will do if in September the government doesn’t reduce sales tax: Colom has called for “creative measures”, Cimarro says that “we’re working on some ideas,” while Gómez Fabra adds that finding consensus across such a wide range of views will be difficult, also pointing out that the tax hike has prompted many companies to operate in the hidden economy. For Colom, the nub of the question is that the tax implies that the arts are a luxury item: “You can’t compare going to see a work by Lope de Vega with buying a fur coat. The Spanish people do not deserve this sales tax.”