Hybrid fee funding model proposed
• Free tertiary education for all is not affordable, says tax committee
Free university education for all is neither affordable nor desirable, but the government could raise the money to help academically capable students who need financial assistance, according to the Davis tax committee.
Free university education for all is neither affordable nor desirable, but the government could raise the money to help academically capable students who need financial assistance, says the Davis tax committee.
It has proposed a hybrid system of grants for poor people, government-backed loans for the “missing middle” and fees for the wealthy, which it says would require an extra R15bn a year.
Increasing the top marginal tax rate for individuals by 1.5 percentage points would raise an additional R5.1bn.
Changing the capital-gains tax inclusion rate for companies from 80% to 100% would yield an extra R1.4bn, and increasing the skills-development levy by 0.5% would provide another R8.8bn, the committee said in its report on funding university education. “While it may not be the most politically palatable option, it does provide the largest immediate reduction in financial exclusion for the smallest government expenditure,” the committee said.
Free university education for everyone was not an option.
“It is simply not possible to find an additional R60bn to R90bn without massive reprioritisation or large-scale additional borrowing.
“Thus, whatever additional funds can be raised and ringfenced for higher education should be done in an explicitly pro-poor fashion. A blanket feefree policy is … regressive and amounts to a large additional subsidy for the rich,” it said.
The report was published soon before President Jacob Zuma released the Heher commission’s report on the feasibility of fee-free higher education and training, covering postschool education. The commission reached a similar conclusion for university students.
But it recommended that students in the technical, vocational education and training sector should get free education, with grants that covered their full study costs.
For university students, it recommended a cost-sharing model of government-guaranteed income-contingent loans sourced from banks.
Banking Association SA MD Cas Coovadia said banks would consider discussions with the government on the provision of loans to students, but speculation that Zuma wanted to disregard the report had “muddied the waters”.
He said: “What we need is more information on what sort of structure the government will put in place to reduce the risk on the loans …
“We have not done any work on that and we cannot move forward on this until we have an indication from [the] government on where it stands on the report,” Coovadia said.
The DA’s higher education spokeswoman, Belinda Bozzoli, said the party welcomed the “professionalism and richness of the report and look forward to studying it further”.
Said Bozzoli: “The president, who has been studying the report for more than two months now, must tell SA whether or not this report will form the basis of the ANC government’s new funding model for higher education.”