The Academic Staff Union of Universities’ planned rise in the Tertiary Education Levy from 3% to 10% tax has been criticized by tax specialists. They claimed that following this course would harm private companies that were already burdened with taxes.
An increase in the education tax from three to ten percent has recently been suggested by ASUU President Prof. Emmanuel Osedeke in order to finance facilities at Nigeria’s institutions.
Osedeke in an interview with Arise TV said, “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?”
Tax specialists, however, maintain that the proposition should be rejected outright and have not taken well to this.
Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PwC, disputed with ASUU in an interview on Arise TV and claimed that the education tax had only recently increased.
According to him, “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% in taxes after accounting for various taxes, including income tax, technology tax, police tax, science and engineering tax, and others.
“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 asked.
The proposal wasn’t appropriate at the time, according to Bismark Rewane, chief executive officer of the Financial Derivatives Company.
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, saying it was not a workable solution.
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 suggested that the money saved from subsidies should go almost entirely toward paying for education.
