Thursday, August 1, 2013

VAT on tat

When I go to a big newsagent or to my local supermarket I exhibit symptoms of a strange disease common to cartoonists, where we search for the magazines that feature our work even though we have no intention of buying them. As usual, I was greeted with a catastrophe. Can you spot the Beano in this display?

It is there, I assure you. Look for the screaming man. 

See it now? This is the 75th anniversary issue of the Beano by the way, and this was actually a good day, but what's to blame for this mess? It's fairly obvious: bags stuffed with plastic toys and thin, flimsy magazines which lack the required tensile strength to prevent flopping about and tumbling onto lower shelves. (And the busy hands and devil-may-care attitude of kiddies). 

Now, if you are not a regular peruser of kids comics like me, you'd probably think that comics for kids are in rude health, but the reality is as different as this shelf is to a helicopter gunship. There are strictly only two comics in this display: The Beano, (incidentally the cheapest publication here at £2.50, 50p higher than it's regular price) and The Simpsons (£2.99 and I have no idea if it features new stories by British artists-I am guessing not). Many of the others feature a page or even three of comics, but most are wall-to-wall features, puzzles, screen shots of TV animations and the like. All good stuff I'm sure, which people work hard on to produce, but how much enjoyment do children actually get from these things? Some of these mags are literally five minutes of entertainment and at £3.99 in some cases that represents enormously bad value. There's a reason these magazines do not print many comics and that is that comics are more expensive to produce. These magazines are purely about profit making, but the profit making is based on attacking buyers by having the jazziest cover and the snazziest free gift. Is it any wonder that these magazines are bagged so that kids and parents cannot examine the contents? 

Now, I am not being an idealist here, companies should be attempting to make the biggest profit possible, but to do so they should be competing on CONTENT, not free gifts and that's why I think there needs to be a change, and wouldn't you know, I think that I may have the answer.

The VAT rules state: 

6.7 Promotional items in magazines
If you link a cover-mounted item such as a sachet of perfume or a CD to a magazine, you can treat it as zero-rated if the following conditions are met:
 • you do not make a separate charge for it, and
 • issues with cover mounted items are sold at the same price as those that do not, and
 • the cost to you of the cover mounted item or items included in any individual issue does not exceed:
- 20% of the total cost to you of the combined supply (excluding VAT), and
- £1 (excluding VAT).

So the plastic toys attached to the magazine which are generally made in the far east, must cost less than £1 to avoid VAT (I suspect that they cost significantly less than that), and they also keep the cover price artificially high: issues without toys must be priced the same as those with. If VAT were charged, this would add a certain amount to the costs of the cover mounted toys. Whether magazines would raise cover prices or look to absorb the costs or simply stop cover mounting is a question I can't answer. It would vary according to the business plans of individual magazines I'd imagine. A 20% charge on the plastic toys is not going to raise costs significantly however; we are talking a maximum of 20 pence, so perhaps we should think a little more deeply about what these magazines really are.

If you've ever seen children looking through the shelves, you will notice that they make immediate visual appraisal at the point of sale. They generally don’t stop to consider the content, and bagging means that often children can’t flick through the mag anyway. Here's an anecdotal case that demonstrates just that:

My girlfriend's 7 year-old niece came to visit us recently and I decided to test out some of my thoughts about these publications. A note of caution: She is quite a reader, so perhaps that skews this experiment somewhat. First of all I gave her the Beano, which she'd never read before and she sat down and read the whole thing, picking out some of her favourite bits. She asked for more comics, so I gave her the 32 page Nuke Noodle comic, free with Dennis and Gnasher magazine this month (plug, plug).

She absorbed most of that, so I gave her Gary Northfield's collection of Derek the Sheep and she liked that even better. All in all, she was occupied for quite a while. Later we went to the newsagent where I let her pick out a magazine. After examining the covers, feeling the bags and checking the free gifts, she settled on a copy of Girl Talk for £3.99, with Moshi Monsters stickers and Love Heart Jewellery (which I spent the afternoon mending and re-mending as the plastic chains repeatedly broke!) The actual magazine is 34 pages of glossy celebrity-based features and fashion stuff. She's had a look, and perhaps she'll return to it, but I doubt it. Either the magazine is too old for her, or she's just not that interested.

It's my contention that these are no longer magazines with toys attached, but toys with a magazine attached. What other product do we buy not for the product itself but for something else? For the thing it comes with, not the thing itself? Perhaps a copy of a newspaper to get a cheaper bottle of water at WHSmiths, but that's the only thing I can think of (and that's a scam to increase circulation figures). On top of that, if we saw the same sorts of toys in a pound shop, we'd probably turn our noses up at them, viewing (correctly) that they were cheap and nasty, yet we spend £4 on them if they are bagged up nicely with a few glossy A4 pages? Madness. Damn you, pester power!

I believe the whole thing should have VAT charged on it: 20% on the whole £4. It's a toy, or a bundle of toys and should be taxed as such. No toys, no VAT-journals and periodicals are zero rated.

Some calculations put together by a finance whizz:

Although these figures are based on a little guesswork, it can be clearly seen that to maintain profits, the cover price would have to be raised.

So what would happen if VAT was charged on this toy/magazine hybrid? Retail culture at point of sale is so ingrained that it’s impossible to say what a massive change like this would mean. The aim is for companies to junk the bag and the toys and force them to treat their products like magazines and comics once more. What I want is for content to be king.

I am considering starting a campaign to ask the Government to change these rules and I really can't see a downside for them. They have been actively looking for new things to stick VAT on, and to improve the situation for families (granted this is a tiny thing, but if your two kids are demanding a 3 or 4 quid mag each during the weekly shop, you'd hope they'd be getting some quality merchandise for that price, wouldn't you?). Ignoring the fact that this is an obvious pipe-dream, I'd say it's also a gamble, because publishers could simply crank up the cover price and preserve the status quo, but I think that these magazines are already at the limit of affordability.

What I'd like from readers of this blog post is their comments, suggestions, thoughts and corrections. I really believe this could work and ultimately we could end up seeing more proper comics for kids on the shelves. More comics is better for you because you probably love them like me, it's better for the british comic industry as young comic readers graduate to older comics and it's certainly better for me, because I write and draw them for a living.

To twitter! #vatontat


spleenal said...

Yeah! Go for it! I was wondering why some publishers dont just fill a bag with cheap toys and leave it at that. Or maybe shovel it into something like a small corn flakes type box. (Would be tidier). Before i was in comics, writing dennis, my kid would choose a mag based on the toy and disguard the mag. "Have you read it?" "Yeah" "Oh. I must have blinked." Comics have loads of words in them reading comics is reading. Which is good for kids. Tell Cameron that when you get ahold of him.

spleenal said...
This comment has been removed by the author.
Dave Shelton said...

The shame is that The Phoenix (no toys, no licensed characters, all new stories by UK creators who retain their copyright) isn't on those shelves - because to make financial sense of providing better (more expensive to produce) content they can't afford for WHS to be taking their whopping cut for distribution.

Plus, it'd still probably get passed over by most kids for its tat-laden competitors.


Unknown said...

I am totally up for backing a campaign like this - as a mum who's had to say 'no' to pestering children who want the fancy tat on show and are not considering the crap on the inside (cos they're kids) and as a teacher who agrees wholeheartedly that 'content is king' or should be. Older kids love animated books, they eat them up in class, why shouldn't they have that quality in comic-form?? It would promote reading in boys (something the gov always has its knickers in a twist about) AND if done right, get girls onboard too - which is an issue also, I think. Good luck, I shall find you on Twitter.... Lou

Unknown said...

I am totally up for backing a campaign like this - as a mum who's had to say 'no' to pestering children who want the fancy tat on show and are not considering the crap on the inside (cos they're kids) and as a teacher who agrees wholeheartedly that 'content is king' or should be. Older kids love animated books, they eat them up in class, why shouldn't they have that quality in comic-form?? It would promote reading in boys (something the gov always has its knickers in a twist about) AND if done right, get girls onboard too - which is an issue also, I think. Good luck, I shall find you on Twitter.... Lou

alexander matthews said...

Thanks all! I really hope we can do something here.

Lou, tweet Maria Miller with those thoughts! I think as the culture secretary someone in her office needs to read my post. Pass my link around! (mumsnet?)

Ian Ellery said...

Excellent idea Alex. Go for it!

George Shiers said...

I agree - go for it!

I think comics also need better covers. The one for the Dennis and Gnasher megazine was terrible, to be honest! Although maybe that doesn't matter because going by your photo at the top of the post you can't actually see the covers anyway!

Julian said...

With 2 small boys under 5, I have to agree that what passes for kids comics nowadays is rubbish. I grew up with Buster and Whizzer and Chips, graduating onto Battle and then 2000AD, while reading and re-reading my dad's Eagle annuals.
I think you'll have to allow for the fact that even proper comics sometimes have a free gift on the cover. I recall that The Beano sometimes had a red plastic spud gun on the cover, and who can forget the bionic stickers with 2000AD. I still wore my Dredd badge from 2000AD issue 300 into my 20s (I would wear it still if it hadn't been stolen along with the jacket it was attached to).
I have all the DFC comics and all The Phoenix comics, so when my boys are old enough to read,, hopefully they will become interested in proper comics.

alexander matthews said...

Hi Julian,

I believe the rules were designed to allow the odd free gift or promotional item, and the consumer protected by the cover price having to remain the same, (although I seem to remember for the sake of a bit of VAT on a gift, some comics would add half again to their price). But now those rules are being abused every week by these companies. I received a tweet from someone who used to work in children's mags. She said that the priority for them was finding the toys, not the content (unsurprising), but also that the cost of these things was usually about 7p!

EqualityForEveryone said...

Wow, you are certainly VAT mad. The extend and detail you have went into is amazing. While you got your niece to be the guinea pig, I am puzzled by the fact that you did not ask her what she thought about the magazines with free gifts. Rather, you left that part of the research at a total loss. "She’s had a look, and perhaps she’ll return to it, but I doubt it. Either the magazine is too old for her, or she’s just not that interested."

So, the downside, VAT is charged, workers in other countries that produce these as you say "cheap goods", loss their jobs and income and poverty rampages throughout the developing countries. In the meantime HMRC make additional profit from parents, who I might add can hardly afford the magazine cost without VAT being added. That's another few million that HMRC can fork out on pay-rises for legals and politicians. Did you know that a judge can earn over £270,000 per year for a 40 hour week?

So, while you are frustrated at the sales of your own comics vs the magazines that offer the free gifts. Get with it. Why not design your own free gift to include with your magazine.

Just seen this post on other website and felt compelled to respond, 24/5/17

Please do not help HMRC line their pockets at the expense of parents. Comics and magazines are next to the check outs in bookshops, general shops and supermarkets. Have you ever tried getting your niece past the chocolate next to tills?. There you are! start a campaign to ban shops from selling crap next to the tills, then you certainly will be doing a great job for future generations. Forget about children filling their minds with crap, but rather save them from filling their mouths full of crap.

And by the way VAT is a pile of crap, its just another way to get taxes from the people to pay for public sector wages that have spiraled out of control.

And good luck on your work, you are certainly creative and love your work.