On the eve of the Australian book industry's major trade events-the Australian Booksellers Association annual conference and the Australian Publishers Association trade show, both held the week of June 1 in Sydney -- the book world Down Under was turned upside down by a deal reached in the upper chamber of Parliament that will allow a 10% goods and services tax (GST) to be introduced next year and to be applied to books.

At the same time, the book industry worries that the government may soon make Australia an open market. While most parts of the Australian book world have rallied against GST and an open market, if there are any differences in approach, publishers seem more concerned about the open market, while booksellers tend to be more upset about the tax. A notable exception to Aussie book industry unity comes from college booksellers, many of whom support an open market.

A Hard-Fought Campaign

The industry had fought a long public campaign against the GST being applied to books (the APA alone spent A$100,000, or US$65,000, on ads concerning books and the GST) and seemed to have the support of the Democrats on the issue. But a last-minute deal reached between the ruling conservative coalition and the Democrats included books in the GST.

The industry's condemnation of the deal was quick and furious. Libby Gleeson, chair of the Australian Society of Authors, said that "children, families and students will be the biggest losers in this equation."

Mary Dalmau, president of the Australian Booksellers Association, said, "The ABA maintains that the planned introduction of a tax on books will affect a large and broad cross-section of the community." Sue Blackwell, executive director of the Australian Publishers Association, told PW, "The industry was very disappointed."

Book Industry Fears

The book world did not seem overly impressed that over the next four years, the government would give an A$240 million (US$156 million) subsidy to the business, part to publishers and part to writers.

The industry fears the GST for a variety of reasons. For one, the tax will be included in the recommended retail price of books and won't show up as a separate item on purchases, as sales tax d s in the U.S. At the same time that the price of books is expected to go up 10%, the prices of many other products, such as music CDs and cars, will drop because other, often higher wholesale taxes that don't currently affect books, will end. Also, as pointed out by ABA conference guest speaker Hut Landon, executive director of the Northern California Independent Booksellers Association, the GST will give international online retailers -- who won't have to pay the tax -- an automatic 10% advantage over competitors in Australia. Publishers also fear that their own suppliers will have to begin charging them tax, which will further raise the costs of books.

If Australia's experience is the same as other countries where GST or VAT has been imposed, book sales will begin declining on July 1, 2000, and not recover to current levels for a year or two.

The industry will continue to fight against the tax's application to books, although many consider the battle lost. And some are more concerned now that the government might make Australia an open market for books, overturning the current system that requires Australian copyright holders to make available books in Australia within 30 days after their appearance elsewhere in the world or lose copyright.

Problem of Low Prices

With the aim of lowering consumer prices on books, the Australian Competition and Consumer Commission (ACCC), a government agency, earlier this year asked groups in the book industry for information about book prices. Many say Australia already has among the lowest prices on books in the world; they fear that an open market would devastate Australian publishing.

In the worst-case scenario (which some call reality), remainders would flood Australia. The best Australian authors would migrate to publishers in New York and London. Australian publishers would have nothing to sell to international publishers, i.e., rights to publish in Australia. Publishers whose Australian-interest titles are in effect supported by imported strong sellers would have to cut back drastically. The most popular titles, including those from abroad, would be published abroad.

For more coverage on the ABA meeting and APA show, see the Bookselling department in the June 21 PW.