An international organization warns the Newfoundland and Labrador government's new book tax will have a "damaging" effect, not just on book retailers, but on literacy rates too.

"It always has a damaging effect," says Ben Steward, director of communications with the International Publishers Association.

"The short term gains made by taxing books are far outweighed by the negative effects of doing so."

The new 10 per cent provincial book tax took effect Jan. 1, which is on top of the existing five per cent federal tax.

Piracy profits

Steward said the tax has the dubious distinction of bucking the global trend, as even most countries in South America have a reduced, or zero, tax rate on books.

"The one exception is Chile, where they're still applying a 19 per cent rate," Steward told CBC's Central Morning Show.

Matt Howse, centre, who operates Broken Books on Duckworth St. joined other publishers and authors for a protest in April, 2016, when the tax on books was announced. (Mark Quinn/CBC)

"The effect of this tax is obvious — book piracy is rampant in Chile, especially text book piracy."

He said the level of piracy is particularly high when it comes to educational books.

'Go back to the drawing board'

Premier Dwight Ball's Liberal government announced the tax during last spring's budget, as part of a wide-ranging plan to hike fees and taxes to cover a crippling deficit exacerbated by the drop in oil prices.

Steward insisted he isn't ignorant of the need for governments to collect taxes, but said a book tax "discourages reading" and that will eventually be reflected in provincial literacy rates and educational testing.

"The legislators who are applying this are being particularly unimaginative about how to raise those revenues," he said.

"Go back to the drawing board and re-examine this policy."