Letter to the treasurer
25 August 1998
The Hon Peter Costello MP, Treasurer
Parliament House, Canberra 2600
Dear Minister
The Australian Library and Information Association (ALIA) represents 10 000 individuals and institutions within the library and information sector and the interests of 10 million users of library services. We wrote to you on 11 June 1998 before the publication of the Government's tax reform plan, indicating our interest in the proposals and raising some potential concerns, and received a reply from the Hon Rod Kemp, assistant treasurer, on 7 July 1998. We now seek your response to more detailed queries.
The prime minister has expressed his support for the contribution of libraries to the community. However our reading of the proposals for reform outlined in Tax Reform: not a new tax a new tax system: the Howard Government's plan for a new tax system, released by you on 13 August, suggests that libraries will be seriously compromised in their capacity to meet the information needs of the Australian community.
We would be grateful for your urgent response to the issues we have outlined below. Staff at the Tax Reform hotline [telephone 133099] have, at the time of writing, been unable to answer any of these questions.
Australian non-profit libraries are grouped as follows:
- National and state libraries - their role is to collect and make available a comprehensive range of literature and information resources to the nation and to support the activities of education, culture and historical record, other libraries and the general public interest.
- University, college and school libraries within the formal education sector
- Public libraries which serve the information needs of local communities, funded by local and state government, with activities supported by state libraries and some federal funding for specific projects.
- Government and parliamentary libraries. Included here are libraries within statutory bodies, such as the CSIRO or the ABC.
Our questions are:
- Since libraries are not mentioned in the document, how will each of these groups be affected by the proposed tax system?
Libraries do not significantly benefit from the loss of the nine taxes replaced by the GST. Instead they face taxes on goods and services previously untaxed.
What library services will be taxable and what will be input taxed, i.e. where the service is not taxed but no credit is allowed on the taxable purchases of inputs required to produce the service? How will the proposed tax regime operate in different types of non-profit libraries?
Following this general question are some more specific issues.
- Libraries within educational institutions
The tax reform document states that 'all mainstream education will be GST-free', and that goods loaned to students free-of-charge will not be taxed. (p94) Does this mean that libraries within educational institutions will be able to claim back the taxation on their print, CD-ROMs and audio-visual collections?
How does that apply to services? Will, for example, TAFE, university and school libraries be able to claim back the connectivity costs to electronic information?
Will postal services be taxable? If so, will the posting of library material to external students or other libraries be GST-free (ie where in the provision of non-taxable services, credit is allowed for tax paid on purchases)?
- How narrowly will 'mainstream education' be defined?
Will the contribution of the national, state and public libraries to the education of the community and to the support of students and academic staff in their education and research be recognised by the proposed tax system?
Will these libraries be able to claim back GST paid on their inputs - some obvious examples being purchases of books, serials subscriptions, computer hardware and software, CDs and CD-ROMs, music, microforms, prints, shelving and furniture?
Will the role of public libraries in providing lifelong learning opportunities to their communities, including services to students engaged in formal education and disadvantaged groups such as the unemployed, pensioners and low-income earners, be acknowledged by the new tax system in the form of tax exemptions or credits for inputs?
- Federal-state relations
How will the goods and services tax be distributed to the states? Will there be an agreed formula to ensure that the smaller states, territories and regional and remote areas have equitable access to quality library services?
At present, federal government funding is provided for the Online Public Access Initiative and the Networking the Nation program in public libraries, regional centres and remote indigenous communities. Will this new tax system negate future federal government involvement in public library and information services? Will future exemptions from the GST require the same legislative regime as the raising of the rate or will state governments be able to give tax exemptions or tax credits?
- Library co-operation
Libraries across all sectors are collaborative institutions and this has significant efficiencies for governments and their communities. Examples of this collaboration are interlibrary lending and document supply, which avoid duplication of book and serial purchasing and make effective use of library collections across the nation. A small charge for cost or below-cost recovery is made for interlibrary loans. Another example is the Australian Bibliographic Network of co-operative cataloguing, which is being upgraded in a new program called Kinetica.
The National Library of Australia and the state and territory libraries administer a number of co-operative library schemes which benefit all libraries, including those solely within the formal education sector. Will the co-operative activities of libraries be taxable, GST-free or input taxed?
Another collaborative scheme is the joint-use library. What will be the situation for joint-use libraries, for example: in South Australia where educational and public libraries have combined in some communities and in Queensland, at Hervey Bay where there is a joint-use university and public library?
- Outsourced activities such as cataloguing, indexing, photocopying, consultancies, media monitoring, technology servicing will attract the GST. Will any of these activities conducted for a non-profit library or a non-profit library service be GST-free?
Will there be differences between the non-profit library groups in the tax treatment of these activities under the proposed system?
- Cost recovery versus profit-making
Will there be any difference between the GST treatment of cost-recovery (which is often nominal), for example: interlibrary loans, photocopying charges, internet-use charges, and profit-making activities, for example: the operation of bookshops/coffee shops within libraries?
Our members would be grateful for your response to the issues we have raised in this letter.
Yours sincerely,
Virginia Walsh, executive director
|
