TAX BREAKS
45. We heard from Colin Brown, Chief Executive of
The Deep, Hull's Millennium science centre, who, rather than capital
or revenue funding, "would like the Government to stop taking
as much money as it does away".[70]
There are a number of ways that the Government can offer tax breaks
that would improve the financial situation for science centres
across the UK.
VAT
46. The Millennium centres were built using considerable
capital funds. In such a situation, VAT rules demand that institutions
either pay VAT on the construction or on the lifetime of the operations.
Centres like The Deep, for example, which would have had a construction
VAT bill of around £10 million, elected not to pay VAT on
construction and instead pay VAT on operations. They pay 17.5%
VAT on admissions fees, for example, and the net annual VAT bill
is around £350,000 per year.[71]
47. VAT rates are set nationally, but must adhere
to the EU's common system of VAT, which is stipulated in Directive
2006/112/EC.[72] We note
that Article 98 of the directive allows for Member States to apply
a reduced rate of tax, no lower than 5%, on supplies of goods
or services in the categories set out in Annex III, which includes
museums and similar cultural facilities. Therefore, one option
would be for the Government to reduce the rate of VAT on admission
fees to science centres. This would provide valuable financial
assistance while maintaining and encouraging the kind of entrepreneurship
that is associated with UK science centres.
48. We recommend
that the Government give serious consideration to a reduced rate
of VAT of 5% on admission fees to science and other educational
centres, as permitted under Article 98 of the EU Council Directive
2006/112/EC, subject to independent research verifying the effectiveness
of science centres in achieving Government policy objectives (see
paragraph 42 above).
Gift Aid
49. The current Gift Aid regulations are beneficial
to science centres. However, the reduction in the basic rate of
income tax from 6 April 2008 will be costly. The Deep, for example,
will lose approximately £50,000 a year in Gift Aid benefit.[73]
We understand that this issue has been raised with HM Treasury
by representatives of the charity sector and trust that their
views have been considered fully.
Business Rates
50. Charities get a mandatory 80% relief on business
rates, which comes out of the central Government budget, but this
can be topped up to 100% at the discretion of the billing authority
and at the expense of the local tax payers.[74]
Non-profit making institutions that are not charities can also
receive business rates relief of up to 100%, although the proportion
borne by the local tax payer is slightly higher at 25%.
51. There is a case to be made that science centres
contribute considerably to the local community, not only economically,
but also in terms of providing educational services.[75]
It is therefore reasonable to expect the local community to contribute
to tax relief for science centres. However, not all local authorities
top up the business rates relief.[76]
We urge all local authorities
to offer 100% business rates relief to science centres.
Funding diversity
52. It would be argued that society would benefit
from increased financial security for science centres. The science
centre community needs resources to be able to continue innovating,
so that school children and the general public can benefit from
exciting, engaging and informative experiences.[77]
During oral evidence, we discussed the financial insecurity of
science centres and a range of funding options.[78]
We have concluded that the surest way to promote financial security
for science centres is to ensure that their funding base is diverse.
53. Science
centres should continue to focus on securing their financial stability
through diverse income streams. These should include local income
(ticket and shop sales), local support (local councils and RDAs),
corporate sponsorship (including industry involvement), charitable
donations (through Wellcome, NESTA etc.), grants (from the EU),
and central Government support. Ecsite-uk has a key role to play
in identifying best practice and helping to ensure that individual
science centres do not have to reinvent the wheel.
48 Science Centres, POSTnote 143, Parliamentary
Office of Science and Technology, July 2000, Box 1. The 18 centres
were: The Big Idea, Ayrshire; At-Bristol; The Deep, Hull; The
Earth Centre, Doncaster; The Eden Project, Cornwall; Glasgow Science
Centre; INTECH 2000, Hampshire; The International Centre for Life,
Newcastle; Island 2000, Isle of Wight; Magna, Rotherham; Making
It!, Mansfield; Millennium Point, Birmingham; Millennium Seed
Bank, Sussex; National Botanic Garden of Wales; National Space
Science Centre, Leicester; The Odyssey, Belfast; Our Dynamic Earth,
Edinburgh; and Sensation, Dundee. Back
49
Ev 197 Back
50
Q 27-29; Ev 72, 98 Back
51
Q 29 Back
52
Q 27; Ev 26 Back
53
Q 27 Back
54
Oral evidence taken before the Science and Technology Committee
on 18 October 2006, HC (2006-07) 203, Q 243 Back
55
Q 27-29 Back
56
Ev 23-24, 37, 40-41, 48, 54, 59, 68, 81-82, 89, 105, 108-109,
115, 120-122, 133, 167-168, 171-174, 180-181, 196-197, 202, 211 Back
57
Ev 53-54, 105 Back
58
Ev 105 Back
59
Ev 56 Back
60
Ev 19 Back
61
Ev 20 Back
62
Ev 21 Back
63
Q 90 Back
64
Q 91 Back
65
Q 90 Back
66
Q 27-29; Ev 72, 98 Back
67
Ev 40-41, 45, 72, 122, 124, 146, 172, 199-200 Back
68
Ev 41, 45, 142, 178, 211 Back
69
Q 53 Back
70
Q 39 Back
71
Ev 27 Back
72
Council Directive 2006/112/EC of 28 November 2006 on the common
system of value added tax, Annex III, item 7 Back
73
Ev 28 Back
74
www.local.communities.gov.uk Back
75
Ev 43-45, 53-56, 134-35 Back
76
Ev 27 Back
77
Ev 105, 118-119 Back
78
Q 27-59 Back
