By Elle Maher, First Year, Mathematics
An investigation considering UoB's status as a charity and whether the benefits it brings to the city outweigh its reduced taxation rates.
For many, the purpose of coming to University is to challenge yourself academically, socially and personally. Yet, little do we know, officially Universities are registered as ‘exempt charities’, meaning their purpose is literally ‘to benefit the public’. This allows the University of Bristol and University of West England (UWE) to prosper from tax exemptions, which Bristol City Council are currently scrutinising.
Considering the running of Universities is becoming increasingly more business-like, the question has to be asked: is this charitable status justified?
Amongst independent schools, churches and museums, universities are registered charities and therefore cannot operate for profit, but instead, only for the public’s benefit. This status means universities can receive relief of up to 80 percent on income tax, corporation tax, capital gains and property tax.
For Bristol City Council, the Universities cause a deficit of £5.1 million. This has led Local Councillors to raise a concern that Bristol’s universities may not be paying their way.
According to Bristol City Council, Mayor Martin Rees has highlighted the council’s position as being one that ‘recognises the contribution universities make to the city but also that these benefits do not come free.’
The Council have particularly focused on the University of Bristol and their operation of the Hawthorns café, and Goldney Hall, as these are both profitable businesses, with the Orangery at Goldney Hall being available for private weddings and costing up to £2,800.
It has been estimated that from these facilities alone, the University could be liable for over £7,000 worth of business rates, but due to their charitable status, they are exempt from approximately £6,000.
In response to the Council’s concerns, the University have argued that their economic output to the city massively outweighs the tax exemption sum of £5.1 million: for example, in 2017 alone the University contributed £1 billion to Bristol’s annual economic output. In addition, many students remain in Bristol after their studies, contributing to the highly skilled workforce.
A new agreement is set to bring about closer working between @BristolUni @BristolOneCity and Bristol Council. Find out about how this will benefit your city here - https://t.co/rORAwcwW7F #BristolOneCity pic.twitter.com/4PxmmNftkg— Bristol City Council (@BristolCouncil) March 10, 2020
Besides the economics, there is an ethical issue being discussed. Considering the extremely high tuition fees, there is an increasing feeling that Universities, including Bristol, are running as businesses and thus exploiting their charitable status.
As a student who pays £9,250 in tuition fees a year, learning that my University is exempt from 80 percent tax on this income led me to question how this is spent - especially considering current strikes over staff pay.
As ‘exempt charities’, universities have to provide full financially accountability to prove they have reinvested their income and are not functioning to make profit.
According to the University’s financial review, the majority of its income goes towards services and buildings, such as the new Fry Building for the School of Mathematics or the provisional plans for the new enterprise campus near Temple Meads train station.
However, some are saying that universities cannot keep building and expanding, as for many cities, including Bristol, this is becoming unsustainable. It could be argued that instead of consuming cities in order to prove they have reinvested profits; they should pay higher tax rates.
On the other hand, looking at Universities as research facilities, this charitable status can be seen as completely justified. It has been reported by the Russel Group that for every £1 of public research funding, Russell Group Universities deliver an average return of £9 to the UK economy, Bristol being included in this.
'It could be argued that instead of consuming cities in order to prove they have reinvested profits; they should pay higher tax rates.'
Socially as well, the impact of high-quality teaching and world-renowned research, especially in areas of Science and Technology, have shaped modern society.
It may not be that you associate world-known charities, such as Cancer Research, with Universities. However, they are mutually dependent on one another and together they have provided immense public benefits within the health and service sectors.
Whilst the Council has questioned the Universities’ charitable status, it is evident that at current the economic output of the University of Bristol and UWE outweighs the capital value of the tax exemptions, which counteracts the council’s argument.
The running of Universities, whether as a business or a charity is certainly liminal, yet ultimately as research centres they do provide a public benefit, justifying their status of ‘exempt charities’.
Featured Image: Epigram / Cameron Scheijde
Do you think UoB should pay more tax? Let us know!