So the University of Toronto would like to sell off its libraries; or at least lease them out for 15 years. What a way to try to raise money! The University should be a pillar of excellence and integrity; a symbol to the workaday world. Once the University scurries around in the pages of the Income Tax Act to find some obscure provision that, in collaboration with some cash-rich company it can exploit, the University is behaving little better than the worst of the research incentive flippers.
The University ha sunk to new depths in creating a loophole in the income tax law. And I think it is the creation of a loophole. My understanding of the tax act is that a deduction is allowed on depreciating assets to allow a company to purchase and write off productive assets that have a reasonable expectation of generating a profit. My personal library is a productive asset and can be written off against my consulting income. Some years I even make a profit. How is the University Library a productive asset for an oil company or an automobile manufacturer?
Where is the reasonable expectation of profit from this particular leasing activity? If it is not a productive asset, then the company has no moral right to write it off against productive income. The company may have the narrow legal right; but morally it is just engaging, with the University as accomplice, in something close to tax evasion.
The U of T should have no part in such a plan. The treasurer of Ontario is to be applauded for his stand on this issue.
There are also a host of practical implications concerning the control of the assets (the library). Are all employees of the company to be issued with library access cards? That at least would give some semblance that the asset was a productive one for the company. Would the company be entitled to direct what additions should be made to the library and what books were to be de-accessed; getting rid of muckraking company histories for example?
Then there is the knotty question of ultimate ownership. Can the sale and lease agreement be made so watertight that the University is the ultimate recipient of the library? what if the owning company is taken over; what if it needs to raise cash; what if it goes bankrupt! I think that in such situations, the assets might be under legal dispute for years and i an extreme case faculty and students banned from using them. Only lawyers could get rich from such events.
This whole episode underscore the North American disease: fine minds are spending time shuffling paper assets rather than getting on with the job of improving productive activity. Successive governments of course face some blame for the chronic underfunding that has lead to these creative machinations. But tax games are not the province of the University and certainly not of the provincial university. The University knows better; it should live by the spirit, not the letter, of the law.
The famous library at Alexandria had the privilege of being burned. Those of Ontario's universities are about to suffer a much worse fate: being privatized.
University of Toronto Bulletin