The European Union has a 20% value-added tax on electronic books.
France cut its rate to 7% and Luxembourg to 3%. The European Union responded this week with a stern note accusing the two countries of violating EU law.
According to the EU statement, "This situation is creating serious distortions of competition that are damaging to economic operators in the other 25 Member States since digital books can easily be purchased in a State other than the one where the consumer resides and, under the current rules, the VAT rate applies is that of the provider's, not the customer's, Member State. Local actors in the electronic book market have complained that some of the dominant players in this market have reorganised their distribution channels to benefit from these reduced rates, which has apparently had a serious effect on the sale of books (both digital and traditional) in the other Member States in the first quarter of 2012."
If companies got together to prevent price competition the way the EU countries get together to try to prevent tax competition, the EU would probably try to launch an antitrust enforcement action against them.
Link via the Publisher's Lunch publishing industry newsletter.