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Senate Select Committee on a New Tax System20 January 1999
The Hon. Peter Cook Attention: Rob Diamond, committee secretary Dear Senator Cook With a membership of 8000, the Australian Library and Information Association (ALIA) represents libraries, librarians and information professionals and the interests of over 10 million Australians who use libraries. We wish to present to the Senate Committee our concerns with the proposed goods and services tax legislation and its impact on libraries. Freedom of access to information is a basic democratic right and the library infrastructure in Australia reflects a commitment to this principle. Rapid change in information and communications technologies and fluctuating currency values are placing great demands on library resources. Libraries have also been encouraged by government policy to augment diminished budgets by charging cost-recovery or below cost-recovery fees for services such as photocopying, interlibrary loans and internet access and it is not clear from either the legislation or other documentation that cost-recovery or below cost-recovery service charges will be treated differently from commercial or profit-based charges. Additional imposts arising from the introduction of the proposed new tax system could seriously undermine the capacity of our libraries to deliver an adequate standard of services to the community. 1. Tax-exempt status of librariesIn its pre-election document, Tax reform: not a new tax a new tax system, the Government implied, in its broad exemptions for local government and education services, that libraries in those sectors would be GST-exempt, at least for any non-commercial activities. This scenario is not, however, reflected in the language of the proposed legislation, nor is the tax status of non-profit and cost-recovery charges differentiated from commercial (i.e. for profit) operations. Libraries are service organisations. Public libraries, school, college and academic libraries and the great institutional libraries of the nation and the states provide services to the community and, to do that effectively, they provide services to each other - interlibrary loans and co-operative cataloguing, shared training and facilities, for example. Since their public role has already been recognised in their present exemption from wholesales sales tax, libraries will not significantly benefit from the loss of the nine taxes replaced by a GST. Instead, they face taxes on goods and a wide range of services previously untaxed. Library budgets are already strained by the unpredictable currency fluctuations which affect their overseas purchases. If libraries are not protected from the cost disadvantage of the proposed tax system, their capacity to maintain, let alone improve, their services to the community will be seriously impaired, at a time when Australia needs to develop and promote itself in the knowledge economy. (i) Libraries in the local government sectorPublic libraries are information resource centres which deliver to all Australians the opportunities for knowledge and lifelong learning. They aid in redressing some of the disadvantages of poverty, distance and lack of formal educational opportunities, at the same time supporting the needs of students, small business, local historians, people coming to terms with the demands of new information technology and other special interest groups. This Government and the Opposition have recognised the importance of the public library system as the logical, cost-effective conduit for delivering Internet access and skills to the community. Responding to the Government's pre-election Tax reform document, ALIA commissioned a report from Arthur Andersen on the effect of the proposed tax on a Victorian local government public library system. The report, attached to this submission, shows that the increased costs to a local government library with an annual turnover of $6 million would be over $41000 annually. This increase does not take into account the added costs of administration of the new tax. RecommendationIf a GST is introduced, ALIA recommends:
(ii) Libraries in the education sectorThe role of school, TAFE and university and non-profit research libraries (for example, those attached to public hospitals and research institutions) is fundamental to the knowledge base of this nation, the educational standards of our citizens, to scholarship and to our ability to participate fully in the global information society. RecommendationIf a GST is introduced, ALIA recommends:
(iii) Government librariesParliamentary and government departmental libraries support our democratic institutions and the administration of national policy and should also be exempted. The National and State Libraries in Australia provide access to their collections and services to the whole Australian community at large, not only, as in many European countries, to scholars. They play an active role in encouraging the best use of the library collections of the country through various co-operative arrangements and they provide leadership in ensuring the development of quality in collections and in services. They are the firm base of the public and educational libraries infrastructure and they have been committed to ensuring the delivery of library services to the remotest areas of the states and territories. RecommendationIf a GST is introduced, ALIA recommends:
2. Books and serialsALIA supports the Australian Society of Authors, the Australian Booksellers' Association and other organisations in calling for an exemption from the GST for books and for serials. Books and journals are fundamental to the delivery of education services and library services and a tax applied to them is a tax on education, research and knowledge, which could have serious consequences for Australian academic publishing and research and mean a significant cost increase to students and families as well as to libraries and educational institutions. A clear statement of support for tax exemption for books and serials and for libraries will demonstrate that the Australian Parliament wishes to encourage creativity and learning and to support our national cultural heritage, as other countries have demonstrated in exempting or imposing a lower indirect tax rate on books. RecommendationIf a GST is introduced, ALIA recommends the exemption of books and serials. 3. Tax exempt status for non-profit community service organisationsALIA is a non-profit organisation providing services to the library and information community and representing the interest of the wider community in having equitable access to the broadest spectrum of information resources. ALIA is also committed to supporting the conservation and preservation of the nation's information resources. These services are both cultural and educational and include promotion of modern, quality library services to everyone in our community, including remote area access to information technology skills, and ensuring that the library profession is trained to the highest international standards. ALIA's community service role is recognised by its current tax-exempt status under subparagraph 23(g)(v) of the Income Tax Assessment Act 1936 (Cth). The imposition of a goods and service tax will seriously disadvantage our ability to continue to provide our services. RecommendationIf a GST is introduced, ALIA recommends a GST-exemption for non-profit community, cultural and educational organisations. Thank you for the opportunity to outline briefly our concerns about the proposed legislation. ALIA is happy to provide further information to the Committee either in writing or in person or both. Yours sincerely
Virginia Walsh Attachment: Arthur Andersen report: How the proposed GST will impact ALIA members, 1998
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