THOUSANDS of jobs could be lost if the rate of VAT on recordings is not reduced and tough action against music piracy is not taken by the Government and the EU, according to the Irish Recorded Music Association (IRMA).

The warning was delivered as part of a joint IRMA presentation with the International Federation of the Phonographic Industry (IFPI) to the Minister for Arts, Culture and the Gaeltacht, Mr Higgins, and the Minister for Science and Technology, Mr Pat Rabbitte yesterday.

The presentation is connected with an EU seminar due to be held tomorrow in Ennis, Co Clare, dedicated to "studying new ways to promote the interests of the music industry in Europe".

The period covering the Irish presidency of the EU is an ideal opportunity to end Europe's "discriminatory VAT system, which excludes recordings from a long list of cultural products, which currently includes books and concert tickets", said the joint statement. The EU is currently reviewing its whole VAT regime.

IRMA emphasises that sales tax on records in the US are between 2 per cent and 7 per cent, while rates of VAT in the EU vary from IS per cent to 25 per cent.

Both organisations expressed concern about the issue of music becoming available on the Internet, which would not be "regulated". Mr Paul Keogh, chairman of IRMA, said the Irish and European music industries were "anxious" about music being downloaded from the Internet for free.

Both organisations pointed out that a meeting of the World Intellectual Property Organisation (WIPO) in December would review current copyright legislation, including issues surrounding digital music publishing. IFPI estimates that in the next five years the value of on line services for the European music industry will rise to 15 per cent of the retail market.

In a memorandum to Ministers yesterday both organisations said the $24 billion European music market would fragment in the next few years, Mr Nicholas Garnett, director general of the IFPI, said EU national governments should introduce legislation to "make it a crime" to download music without crediting the original producer. He said the record industry is considering methods of coding music on the Internet which could only be decoded by some kind of digital "key" obtained from a record company.