LONDON (VIP NEWS) – Rob Hallett, AEG Live president of international touring, has expressed his concerns about the potential impact that a rise in V.A.T. (sales tax) in the U.K. will have on the live music business, reports Billboard.
V.A.T. (Value Added Tax), applied to goods and services, is widely expected to rise when the country's new coalition government announces its emergency budget June 22. At present V.A.T. in the U.K. is set at 17.5%. According to a survey of 28 independent economists published by the BBC last month, the majority of analysts consulted predict a rise to 20% V.A.T. in order to address the country's massive financial deficit.
"My biggest fear is the 20% [rate in] V.A.T.," Hallett tells Billboard.biz. He states that any rise would lead to possible financial hits on contracts that have been signed for AEG Live services at the current 17.5% V.A.T. rate.
Hallett says that if V.A.T. does increase to 20%, that will affect deals already made "which on some of the size grosses we've got is not good news."
"It's the government taking money out of our pocket," he adds, noting that it could wipe out any profit on those deals.
Tickets Price Hike
If the U.K.'s new coalition government does introduce a rise in V.A.T., Hallett tells Billboard.biz that promoters such as AEG Live will have little choice but to add the extra tax charges to ticket prices.
"[For] shows going forward, I guess we can compensate," he says, "Unfortunately, it's only one person who is going to pay – the general public once it's [the potential V.A.T. rise] bedded in, which makes our product more expensive again. Will that hurt us? I don't know."
Hallett also expresses concern about the overall rise in living costs that a hike in V.A.T. will cause. "Suddenly people's wallets are going to be £20 ($29), £30 ($43) lighter depending on how much money they spend in a week and that's the cost of a ticket," he says.
Any potential rise in V.A.T. in the U.K. comes at a "worrying time" in the live music industry, according to Hallett.
Recession Bites Live
"You're starting to see the recession affecting us now, which you hadn't done until recently," he explains. "Now, I'm starting to see signs of it. I'm starting to see maybe 100 seats left at a show when before it was completely [packed] to the rafters."
Although the U.K. is technically out of recession, the economic climate is still tough and unemployment is rising.
Asked how AEG Live plans to counter the impact of the recession, Hallett says, "You've just got to careful with your ticket pricing. Try and keeps acts' fees sensible, which means keeping production sensible, which means being able to price the concert experience at an affordable price. It's a worrying time."
Despite his concerns about how the economy could affect the live biz, Hallett says business at AEG Live – which this week began a 12-date run of Bon Jovi shows at London's O2 Arena – is currently "very buoyant" thanks to some major touring artists. He points to recent AEG-promoted tours from major acts including Black Eyed Peas, Rod Stewart and Alicia Keys as doing "great" business.
"It's just that you're always thinking 'how long can we continue this run?,'" he goes on to say. "So far we've got a Justin Bieber tour coming up, which is going to be huge. Usher is back with a tour in the summer. Ne-Yo is going to come back. So it's still looking good. I'm just always a little bit wary.”
"Who was it who said, 'you've got to keep your feet on the floor and reach for the stars?' A brighter man than me, but I've always liked that saying."