‘Perverse’ VAT policy will harm libraries and research, Chancellor told

Plans to increase VAT on e-books to 20 per cent will not only affect university libraries but will also inhibit research and learning and the digital economy, the organisation representing the UK and Ireland’s university libraries has warned.

Toby Bainton, secretary of the Society of College, National and University Libraries, argues in a letter to the Chancellor of the Exchequer, George Osborne, that “the current VAT regime is perverse in relation to the government’s drives for efficiency and to encourage the digital economy”.

Printed books are not subject to VAT in Britain, and European Union ministers agreed last year that member states had the option of reducing VAT on e-books to 5 per cent.

Yet the British government continued to charge the full rate of 17.5 per cent – and this is set to rise to 20 per cent in January 2011. The increase represents an extra cost of about £3 million a year to hard-pressed university libraries.

In his letter, Mr Bainton reminds the Chancellor: “More than 50 per cent of research library acquisitions expenditure is on e-publications. They are ‘greener’, they save valuable square metres of library storage space, and they are the format of choice for busy researchers. It actually inhibits research and learning, and the digital economy, to tax them at the full rate while their printed counterparts benefit from the reduced rate.”

In reality, explains Mr Bainton, “the option of shifting back to text is often not realistic, particularly in STEM [science, technology, engineering and mathematics] subjects, so libraries will be badly hit and collections will be less comprehensive, though the difference to overall Treasury receipts will be almost negligible.”

At a time when university budgets are being cut hard, he urges the Chancellor to rethink his VAT policy on e-books as one way of “helping higher education without doing much harm to tax revenues”.

The British Universities Finance Directors Group has expressed similar concerns.

matthew.reisz@tsleducation.com