• Readers, writers, publishers, and booksellers highlight diminished capacity to buy, publish, and sell books

The Colombo International Book Fair (CIBF) is currently taking place at the BMICH premises, with a spotlight on the 18% Value-Added Tax (VAT) applied to books. 

With the participation of over 180 publishers and sellers spread across 13 halls, at each entrance is a desk collecting signatures of the public. This is the Sri Lanka Book Publishers’ Association (SLBPA) campaign to sign a public petition demanding the exemption of books from the 18% VAT. 

‘End the Tax on Knowledge’ read a placard at one such signature collection point where mime artists directed book fairgoers to support the cause. ‘Hands Off Book Tax’ and ‘No VAT on Reading,’ read others. 

In the span of 26 years, what began at the Colombo National Art Gallery (Kalabhavana) as the Colombo Book Fair in 1999 has evolved into the Colombo International Book Fair held annually at the BMICH. 

Holding a press conference before the opening of the event, the SLBPA said that despite raw material prices having decreased, the VAT stands in the way of giving consumers “significant” discounts at the book fair.

18% VAT on books

Speaking to The Sunday Morning, CIBF Committee Director Samantha Indeewara said that the Government had been informed of their request to remove the VAT. They await a favourable response. 

“The public petition is being signed to show the Government that it is a burden on the people,” he said.

He explained how book publishers and sellers experienced the current taxation: “When a book is published, only labour is utilised as a local resource. All raw materials like paper, ink, and plates are imported.” 

Indeewara claimed that books were taxed through raw materials when they were imported, taxed at the stage of printing, and finally taxed at 20.5% at the point of sale of an individual book. “Nowhere else in the SAARC region is the book taxed in this way,” he added. 

Navoda, a 24-year-old from Chilaw, noticed that the number of books she could buy with the money at hand had dropped. Along with her friends, she signed the petition. “When we walk around, we can feel that the book prices are high,” she added.

While acknowledging the discounts, Navoda felt that her spending power had declined.

Book publishers who do not own outlets are not directly affected by the VAT, said Vidarshana Publishers Managing Director Janaka Inimankada, whose organisation did not participate in this year’s book fair. “The VAT directly affects booksellers, not publishers.” 

He said that booksellers had to pay the VAT every three months and explained how this impacted publishers who were not engaged in selling books. 

“Booksellers increase the commission charged for selling books,” he said, adding that the VAT gets added there too, increasing the price of books. 

The VAT is only imposed above a certain threshold of earnings through selling books, according to Nine Publishing Managing Director Nayana Alahakoon. As a niche publisher, which sells books on academic and political themes, Alahakoon expressed satisfaction with the numbers they had attracted to their stall at the book fair. 

“The 18% VAT does not impact us very much, although it does impact bigger sellers who make large annual incomes. But there aren’t many like that in the industry, only a few very popular names.”

According to SLBPA Secretary Lasitha Umagiliya, Prime Minister Dr. Harini Amarasuriya and Minister of Health and Mass Media Dr. Nalinda Jayatissa have acknowledged the concerns raised by the SLBPA around the VAT. Attempts to contact Minister Jayatissa were not successful. 

Multiple attempts to contact officials of the Inland Revenue Department for comments on the tax policy for books also proved futile. 

While noting that his opinion may not be very popular, Advocata Institute Chief Executive Officer Dhananath Fernando said that in an ideal scenario, the VAT should not be removed from books but should be applied consistently across all goods and services. However, he said that the trade-off must be that it should be the only tax, with no additional taxes layered on top.

He based his argument on the principle that price reflected the scarcity value of anything. “If you start targeting certain items, like removing VAT from books, you are inherently disincentivising other related sectors,” he said.

If books are incentivised through a VAT exemption, the publication and printing industry may switch from connected industries like newspapers to books. “If VAT is applicable for newspapers and not for books, people in the newspaper industry will naturally be drawn to the book industry because it has suddenly become more financially attractive.”

Instead, when the VAT was applied to all goods and services, the scarcity value of goods was not affected, he said. 

For this to work, he said that changes should take place in the current tax regime. “We should not have any other taxes like cess, Ports and Airports Development Levy (PAL), and income tax imposed on top of each other.”

Fernando opined that VAT was a “more reasonable” tax because you only had to pay it for the value addition at each stage of the supply chain. He recommended that VAT be kept while the numerous other taxes applicable to inputs such as the taxes on ink, paper, equipment, storage, and logistics were removed. 

“Around the world, VAT is considered a reasonable tax precisely because it targets value addition. This is the ideal situation we should be aiming for,” he said. 

Experiences of readers

The book fair grounds, as always, were crowded not only with books but with book signing events and launches, musical programmes, and four areas dedicated to food stalls. 

Navoda, who had come to the book fair with her friends, felt that many of the visitors had been drawn by titles and excerpts of books that had gone viral on social media. “It is good to see reading going viral. The trend is good.” 

She had come looking for ‘Lilac’ by Yesha Fernando, ‘Forget Me Not’ by Charitha Prawardhi Bandara and Chathuri Dhamayanthi, and ‘Toxic’ by Mohan Raj Madawala – all titles that have become popular on social media. 

As a student of software engineering, her life is hectic and gives her little time to read, which impacts her choice of books. “When we look for books, we look for things that are more entertaining and have an emotional element.”

However, she felt that the books were expensive, an experience that resonated with 57-year-old Kamal Perera, who had come with his family. 

Perera is a schoolteacher who enjoys reading in English. “The book I wanted to buy was Rs. 4,000. I did not think it would be that expensive as it was printed with cheap newsprint paper.” 

A blanket 20% discount was given in most stalls with some exceptions of 15% at stalls that sold English books. In addition, the bargain counters had discounts that went up to 80-90%. 

Chathuri Jayangani from Maharagama had come with her daughter and son, for whom she bought books. She felt that there was a wide choice of books and more vendors and stalls than during previous exhibitions. 

Impact on the book industry

The foundation of Sri Lanka’s book trade is a hybrid of sellers and publishers. For some prominent book companies, the primary focus is not publication but retail, operating established bookshops. 

Below these big players, the vast majority of the industry consists of medium- and small-scale publishers. For these entities, the book fair is often a family affair, where the stalls are manned by members of the family, according to Inimankada of Vidarshana Publishers. 

Today, the book fair is not just a sales event. It has become a lifeline for the industry. “The industry has developed an over-reliance on the fair’s earnings,” said Inimankada. 

Many smaller publishers cover the previous year’s costs through this year’s book fair earnings, where others rely on the daily earnings generated at the fair to fund the printing of subsequent batches of books. “This is why some books are launched towards the end of the fair,” he added. 

Even the larger entities treat the fair as essential, depending on its annual revenue to renew their revolving loan facilities. 

The place of Tamil-language books

Holding a parallel press conference, the Sri Lanka Tamil Book Publishers’ and Sellers’ Association raised that out of all stalls, only three had been allocated for Tamil books. This raised concern over linguistic equality in a scenario where a lack of Tamil books was observed amid an abundance of Sinhala and English books. 

Moreover, highlighting that the quantities of books sold in Tamil were small, Bhagya Publications Founder Thilakar said that the 18% VAT impact was felt strongly. For sellers of Tamil books, their competition is with books published in South India imported by local sellers. 

The association called for more space for Tamil book publishers and sellers at the book fair along with opportunities for a wider range of Tamil booksellers and publishers. 

When asked, CIBF Committee Director Indeewara rejected this grievance. “Kumaran and Poobalasingham are some of the Tamil book importers in our association. They have room here. If a direct request was made to us, we could have given more stalls. But if it was past the deadline, we have no way of allocating stalls because they go out very fast,” he said.

He held that 90% of Tamil books in Sri Lanka were imported from South India and that Sri Lanka “only has about two Tamil-language publishers”.

Criticisms of the publishing industry

Inimankada slammed the publishing industry, which he is also a part of, for “increasingly lacking accountability” for the material published. 

“When we publish a book, we have no way of knowing where it will end up. What I publish today may be read by someone in the future in a context we cannot even imagine. So we have to take responsibility for what is published,” he said. 

Inimankada further alleged instances where books had been published without the knowledge of the writer who had not completed proofreading the text. He recalled another instance where a publisher had published the text with the author’s notes to the layout. “This shows that nobody had read the book before it went into print.”

He felt that Vidarshana Publishers, an entity that prominently publishes translated classics and modern Sinhala classics, did not have a large readership within the book fair. He attributed this to the general lack of readership worldwide for texts of such genres. 

“The year 2024 saw the highest attendance in book fair history – 600,000 visitors. But out of that, only 6,000 had bought books from us. That is our audience.” 

Inimankada further noted that the rise of educational texts and exam preparation material had shifted the dynamics of the book industry as such books had a greater demand. 

He called for the book fair to become a place for innovation where creative publication was explored. 

Kumudu Kumarasinghe, a writer of Sinhala short stories and novels, raised concerns over the 10% royalty afforded to writers by publishers. “I cannot imagine how the royalty is sufficient for someone who writes for a living.” 

Kumarasinghe writes for self-satisfaction and feels that what makes her write again and again is the pleasure she gains out of the feedback she receives. However, she acknowledged that there were writers who earned well through their writing.