Yesterday I got some more bad news on the economic front. As you all know too well, the culture industry has been going through a very difficult moment since VAT on tickets rose from 8% to 21% in September. Many companies will disappear and a large number of artists will not tour in our country anymore. It is very difficult for a business man to survive if from one year to the next you take away 13% of his turnover, as it is impossible to add this VAT to the price of the ticket (people just can’t afford it) he has to assume this extra cost. For example, now the PS full festival ticket costs 145€. So, to start, with VAT and SGAE (Performing Right Society) we have to deduct 31%, that is to say 37.15€. This is an outrage that makes this business practically unviable.
To make a quick comparison, in Portugal the VAT rate applicable is 13% (and it is one of the highest in Europe, with the average rate being at about 7%) and the authors’ rights are negotiated directly and are usually around 5%. With both Vat and SGAE this amounts to 18%. If the ticket costs the same we would be deducting 17.52€, nearly 20 euros less than in Spain. For this reason, with tickets costing 110€ for Optimus Primavera Sound, we have practically the same margin as with the 145€ tickets in Barcelona. This is madness because it makes the countries around us much more competitive than us. They can offer cheaper tickets and put up more money for an artist. This means the impending collapse of the sector and we can expect a lot more unpleasant surprises this year. Not even the most consolidated of festivals is safe. And obviously, no one with capital is going to want to get into this sector now.
Ok then, as if that weren’t enough, the Government has issued a circular in which they clear up a point that had created a degree of confusion. As Vat applicable to food, the restaurant industry and bars in general, is at the reduced rate of 10%, we took it for granted that the tax applicable on the bars and food at a festival, at a concert venue or at a discotheque was also 10%… Well it isn’t, we are considered as mixed spectacles and a 21% is applicable in all these cases. This means that either we put the price of drinks and food up or we lose another 13%. It is so ridiculous that in a normal restaurant the VAT is at the reduced rate of 10% (because they say it is tourism), but if that same restaurant has a free pianist for entertainment during the dinner the VAT applicable is 21%. That is to say that the system is penalising music.
If I set up a bar on the street, I pay 10%. If next to that bar I set up a free stage with musicians then I pay 21%.
Fantastic! A round of applause for the luminaries!
Ladies and Gentlemen this is really fucked up. We are lucky enough to be on a sound footing. So this year we will not apply the VAT and we will lose that additional 13% (we cannot further increase the price of the full festival ticket, when what was planned was to reduce it). We will ride the storm this year and see what the future has to offer. But nobody sets up a business to lose money and I can assure you that no businessman in this sector has a profit margin of 13%.