No end in sight to taxing textbook costs
On the bustling streets of Bandra, a suburb in Mumbai, students are flocking to a tiny bookstore tucked away next to a McDonald’s. The shelves are packed with books ranging from bestsellers to textbooks to obscure titles. Prices range from 80 rupees (R14.80) to 650 rupees (R121.40).
In the state of Maharashtra, there is 6% value-added tax (VAT) on books and no tax on educational books.
This has made learning more accessible. It is an impressive feat, considering that India has 315-million students compared with about 1-million in SA.
In SA, the 14% VAT applies across the board, including textbooks. For some students, a year’s worth of textbooks could cost about R6,000, a hefty price when many students can barely afford a year’s fees.
The National Student Financial Aid Scheme (NSFAS), which provides study loans to academically able but financially needy students, provides a R5,000 textbook stipend. Depending on the course, this isn’t always enough.
Pricey textbooks are part of the larger crisis in tertiary funding that has led to student protests over the past few years. Popular textbook store Van Schaik, which makes up about 50% of the market share for academic texts, has called for abolition of VAT on books.
“The continued taxation on literature is a direct taxation on the knowledge of our people,” the bookstore says. “Reading a book, becoming a literate South African, can open up so many opportunities and improve education levels and stimulate the economy.”
In 2015, more than 500 students from the Tshwane University of Technology (TUT) took to the streets of central Pretoria. They marched to the Treasury to present their demand for free higher education and to the South African Revenue Service (SARS) to demand that it stop taxing textbooks and introduce a higher education tax targeting the wealthy.
At the ANC’s conference in December President Jacob Zuma announced there will be free tertiary education for poor students, but there has been no response to the demand for cheaper textbooks.
The TUT memorandum read: “We’ve noticed very sadly that SARS contributes to our exclusion [at universities] and the super-exploitation of our poor, working-class parents by taxing students’ study material. Why do we keep taxing students in this country if corporates are evading tax?
“You have been failing to tax the super rich. Stop taxing the poor. Tax the rich.”
But Treasury has stuck to its guns for more than a decade while the government has repeatedly been urged to scrap VAT on books. Former finance minister Trevor Manuel rejected the idea in 2004, and all of his successors have followed suit.
In 2006, Treasury said although it was important for the government to send consistent signals that literacy and education were important, there wasn’t a case for zerorating VAT on textbooks.
“Zero-rating could have symbolic importance but it is unlikely to have a lasting impact because VAT’s impact is essentially hidden. The focus on building literacy has to be on the first three years of schooling,” Treasury said.
Severus Smuts, an indirect tax specialist from Deloitte, says although there was a lot of lobbying on the issue a few years ago, Treasury was clear in its position. “It may not have a big impact. Books are being phased out at the moment and there is a movement towards electronic books,” he says.
But access to tablets and laptops remains a pipe dream for many students and even without the burden of an additional 14% the cost of publishing in SA is mounting.
According to the South African Book Development Council, the publishing industry is dominated by educational publishing, which accounts for 74% of locally published material and 60% of all books sold. Academic books make up 10% of the market.
The cost of a book has to take into account printing, paper, binding, content, royalties, typesetting, editing, distribution, the bookseller’s costs and marketing and sales costs before VAT is even added.
In India, the cost of books is reduced through publishing mostly paperbacks instead of hardcovers, compromising on the quality of paper and printing in greyscale instead of colour. South African publishers haven’t quite worked their way around these quality issues yet.
Universities are also trying to bridge the gap of accessibility. The University of Johannesburg (UJ) is in its second year of implementing a R18m fund to buy e-textbooks.
“We entered discussions with publishers about the best possible price per unit and identify a priority range of textbooks,” says Rory Ryan, executive director of academic development and support at UJ.
The discounts only apply to certain programmes and UJ estimates that funding e-textbooks for all modules would cost upwards of R100m.
So far, the university has managed to provide e-textbooks for 74 modules and 42,296 possible “redemptions”, which means students download e-textbooks at no extra cost. The university has also negotiated reduced rates for students buying their own copies of the e-textbooks.
It is a start, but as classes are set to begin at tertiary institutions, the high cost of textbooks is expected to be an issue again.