A Report on the Feasibility of Textbook Rental - IBHE

Impact on Tax Revenue.Property Tax. Implementation of a rental program would not have an impact onproperty taxes. If third-party bookstores near campuses were forced out of business by rentalprograms, property taxes would still be collected on the property currently occupied by thirdpartybookstores regardless of their future use (Illinois Department of Revenue).Corporate Income Tax. Corporate income tax revenue would likely be affected bytextbook rental programs. Both independent bookstores operating off-campus and companies,including Follett and Barnes and Noble, that operate on-campus bookstores would likely see theirincome decline as a result of textbook rental programs. The confidentiality of income taxinformation precludes an estimate of the potential loss of revenue by the Illinois Department ofRevenue.Sales Tax. A proliferation of rental programs would impact state and local sales taxrevenues. Sales tax would not be collected on textbooks in a rental program as the books wouldno longer be purchased. Following the Illinois Department of Revenue’s method for estimatingthe loss of revenue resulting from a sales tax exemption, rental programs at public institutions notcurrently offering textbook rental could result in a $14 million annual decrease in general fundsrevenues.COST-SAVING ALTERNATIVES TO TEXTBOOK RENTAL PROGRAMSAs is evident in the legislation from other states presented earlier in this report, variouscost-saving alternatives to rental programs exist. These alternatives could be mandated throughlegislation or adopted by college and university boards of trustees.Book Buy-Back ProgramsPromoting book buy-back programs could be a significant way to reduce textbook costsfor students. At the end of the semester, students are able to sell back their textbooks and in returnthey receive up to 50 percent of the market price. At the beginning of the next semester, thesetextbooks are then sold to students at approximately 75 percent of the market price. Disposableitems, such as access codes and lab and study books, are generally not included in theseprograms. The buy-back of a textbook is dependent upon the textbook being used the followingsemester. The adoption of a new edition forecloses the ability to sell back the textbook.Educating and raising the awareness of faculty members on the correlation betweentimely textbook adoptions and textbook costs is fundamental to an enhanced buy-back program.Timely textbook adoptions by faculty members increase the number of textbook buy-backs andthe number of used textbooks available for the next semester. Enhanced book buy-back programswould have no financial impact to the State of Illinois or to the institutions.The Association of American Publishers, however, contends that textbook buy-back mayhave long term implications for textbooks costs. “Fixed costs associated with textbookdevelopment must be spread across the number of products sold. With more used textbooks onthe market, fewer new textbooks will be sold, which will eventually require publishers to raise theprice of texts to cover costs and make a reasonable profit” (Association of American Publishersresponse to draft 2007).-41-