Tax experts have criticized the Universities Academic Staff Union’s proposed increase in the Tertiary Education Tax from three percent to a 10 percent tax. According to them, going down this path would hurt private companies that are already overburdened with taxes.
ASUU President Professor Emmanuel Osedeke recently proposed an increase in the education tax from three to 10 percent to fund infrastructure at Nigerian universities.
“In 1992, when we had a disagreement with the government, the government said we should look at other ways to get funding. This is how TETfund came about. This time the government says there is no money to finance it and talks about using tuition to raise money. How can a man earning N30,000 afford it? Why not take 10 percent of big business and inject it into the education system to have a better and free country? Osedeke had said in an interview on Arise TV monitored by The punch.
But this has not gone down well with tax experts who insist the proposal should be dead on arrival.
In an Arise TV interview, tax policy partner and Africa tax leader PwC Taiwo Oyedele disagreed with ASUU, saying there was only an increase in education tax a year ago.
He said: “And based on the 2022 Finance Bill, there is a proposal to take it to three percent from 2.5 percent. For those of us involved in tax matters, I can authoritatively say that one basis point of the education tax rate is equal to two basis points of the corporate income tax rate because it is calculated on a much larger than corporate income tax.
Oyedele argued that when calculating the corporate income tax, technology tax, police tax, science and engineering tax, among others, a company would effectively be paying more than 40 percent of taxes.
“This is one of the highest in the world for a country where you need to attract investment. It is even higher than that of the OECD. The problem we have in the education sector is not increasing the burden on the private sector to finance them. The fundamental question is that in the last 10 years the tax on education has contributed more than N2tn to this sector. Who is explaining how that money has been spent? she asked.
According to the CEO of the Financial Derivatives Company, Bismark Rewane, the proposal was not right at the moment.
He said: “That is another knee-jerk reaction with all due respect to ASUU. What have we achieved with the 2.5 percent Tertiary Education Tax? We should see how the tax revenue has been used, as well as its impact.”
On the student loan plan proposed by a presidential candidate in next month’s election, Rewane said it was not a viable option.
He said: “The first thing a lender is concerned with is the source of loan repayment. You are lending money to students to get an education without knowing if they will get a job. I don’t think it works anywhere. Even in the United States, it is a problem. I think a much more viable option is to give scholarships, grants, and fellowships so that people can have an education. Free, compulsory and quality education is a right”.
He suggested that money saved from grants should go almost entirely to funding education.