Bob Doris, SNP MSP for Glasgow, has written to Chancellor of the Exchequer, George Osborne, ahead of the UK budget to support moves by universities across the UK to have VAT reduced on e-resources.

Currently, electronic resources such as e-journals, e-books and online databases attract a VAT rating of 17.5%, whilst their paper copy counterparts such as books and magazines are VAT exempt.

The British Universities Finance Directors’ Group (BUFDG) estimate that VAT on e-resources costs universities around £10 million a year, which is not only costly for the education sector but also a disincentive for new research. It is also understood that lowering VAT on online publications could be revenue-neutral or even revenue-positive to the UK Exchequer over time given that tax relief would incentivise research.

Mr Doris has written to the Scottish Government and is hoping to enlist the support of Scotland's Education Secretary, Mike Russell, to support the BUFDG campaign.

Mr Doris commented: "I welcome the acknowledgement from past and present UK Governments of the importance of VAT zero books. However, with the growing importance of e-resources for learning, particularly in Scotland’s Higher Education institutions, it is now time to look at reducing the VAT burden on electronic media.

“The UK Government could reduce VAT to 5% and potentially not suffer in terms of overall tax take. More importantly, removing this tax on learning could be a huge boost to the education sector.

“The forthcoming budget is an opportunity for the new UK Government to demonstrate a listening approach to the education sector. I have written to Chancellor George Osborne to indicate my support for the campaign and have asked my colleagues in the Scottish Parliament to demonstrate their support by signing a parliamentary motion. I have also asked Education Secretary Mike Russell to make formal representations to the Chancellor on behalf of the Scottish education sector and I sincerely hope Mr Osborne gives this request the consideration it deserves. "

Notes:

1.  Scottish Parliament motion:

S3M-06607 Bob Doris (Glasgow) (Scottish National Party): Reducing VAT on Educational e-Resources— That the Parliament expresses concern at the current practice of applying full-rate VAT at 17.5% on electronic resources such as e-journals, e-books and online databases; recognises that e-resources are increasingly important to the education sector, are particularly vital to the sciences and technology and are increasingly being used as core materials in the arts and humanities; notes that, according to the , library VAT costs in a typical research institution amount to £175,000 per annum and that in larger institutions this figure is far higher; supports calls from BUFDG in advance of the UK budget for VAT in this area to be reduced in common with recent developments in other European countries, including a reduced rate of 4% in Spain and proposals to reduce VAT to 6% in the Netherlands; believes that the estimated £10 million cost to universities across the United Kingdom of having full-rate VAT applied to e-resources is significant and will become a yet greater burden in future years as usage increases and the constrained financial environment intensifies; considers that a VAT reduction on e-resources would do much to encourage research, and urges the Chancellor of the Exchequer to consider well founded claims that such a reduction in VAT may be either revenue-neutral or positive in the longer term.

Lodged on Thursday, June 17, 2010; Current

2. Items exempt from VAT