The Academic Staff Union of Universities’ proposal to raise the tertiary education levy from three percent to ten percent has been criticized by tax experts.
They argued that following this course would harm private businesses, which are already burdened with taxes.
To pay for the facilities of Nigeria’s institutions, ASUU President Prof. Emmanuel Osedeke recently proposed raising the education tax from three to ten percent.
In an interview with Arise TV that The PUNCH observed, Osedeke had stated; “In 1992 when we had a disagreement with the government, the government said we should look for other ways of getting funding. That was how TETfund came. This time around, the government is saying there is no money to fund it and it is talking about using tuition to raise money. How will a man earning N30,000 be able to afford it? Why not take 10 per cent of big companies and inject into the education system so that you have a better and free country?”
However, this has not been favorably received by tax specialists, who maintain that the proposal should be rejected outright.
In an interview with Arise TV, Fiscal Policy Partner and Africa Tax Leader at PwC, Taiwo Oyedele, disagreed with ASUU, claiming that the education tax had only recently increased.
He said, “And based on the 2022 Finance Bill, there is a proposal to take it to three per cent from 2.5 per cent. For those of us who are involved in tax matters, I can tell you authoritatively that one basis point of education tax rate is equivalent to two basis points of companies income tax rate because it is calculated on a much larger base than companies income tax.”
According to Oyedele, a company would actually be paying more than 40% tax after computing the income tax, technology tax, police tax, science and engineering tax, and other taxes.
The plan, in the opinion of Bismark Rewane, chief executive officer of the Financial Derivatives Company, was not appropriate at this time.
“This is one of the highest in the world for a country where you need to attract investments. It is even higher than the OECD. The problem that we have in the educational sector is not by increasing the burden on the private sector to fund them. The fundamental question is that over the last 10 years, education tax has contributed over N2tn to that sector. Who is explaining how that money has been spent?” he questioned.
According to the Chief Executive Officer 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 per cent Tertiary Education Tax? We should look at how utilisation of tax proceeds has been as well as its impact.”
Rewane criticized a presidential candidate’s plan for student loans in the coming election, saying it was unworkable.
He said, “The first thing a lender worries about is the source of the repayment of the loan. You are lending students money to get education without knowing whether they will get jobs. I do not think it works anywhere. Even in the US, it is a problem. I believe a much more viable option is to give scholarships, grants and bursaries so that people can have education. Free, compulsory and quality education is a right,” he added.
He proposed that money saved from subsidies be almost entirely used for education funding.