Bob Doris, SNP MSP for Glasgow, who has been supporting a campaign by the British Universities Finance Directors’ Group to have VAT reduced on e-resources, has won the support of Mike Russell MSP, the Cabinet Secretary for Education and Life Long Learning.

Mr Doris wrote to both the Chancellor of the Exchequer George Osborne and Mike Russell MSP, ahead of the recent UK budget asking them to support the request 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% (soon to be 20%), 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 was disappointed that the chancellor chose not to act for the benefit of the higher education sector and has still to receive a formal reply from the chancellor to his letter. However in a boost to the campaign Mike Russell MSP, the Cabinet Secretary for Education and Life Long Learning has added his support in a letter to Mr Doris saying 'I am disappointed that the issue you raised does not appear to have been addressed in the recent budget but I would urge you to continue to pursue your case'.

Mr Doris commented: "The support of Mike Russell MSP, the Cabinet Secretary for Education and Life Long Learning is a timely boost for the campaign and I will forward a copy of his reply to me to the British Universities Finance Directors’ Group. There was disappointment when the chancellor missed a golden opportunity to reduce the VAT burden and create a level playing field between books and e-resources.

"I very much hope the UK Government will reconsider the matter with a view to reducing VAT to 5% on such materials. I know the UK is in a difficult financial situation but any reduction in this area could be self financing by boosting the amount of such publications sold and hence maintaining the overall tax yield. This could benefit our higher education sector without increasing the burden on the public purse.

"I continue to welcome the acknowledgement from past and present UK Governments of the importance of zero VAT books but  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".

Notes:

1. Reply from Mike Russell MSP

2. Letter to George Osborne MP

3. 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

4. Items exempt from VAT