More tax won’t meet education needs – Pravin

Rorisang Kgosana

Allocation of more money to assist with funding higher education would require the reprioritisation of funds from other required programmes, Finance Minister Pravin Gordhan told the Fees Commission in Pretoria yesterday.

Gordhan and his deputy minister, Mcebisi Jonas, were making submissions on behalf of the Treasury to the Commission of Inquiry into Higher Education and Training.

The finance minister said South Africa faced realities such as uneven income growth, where the bottom 20% benefit from social grants and access to services, while the top 20% have benefited from the rising demands for skills and pay increases.

Wealth also remained concentrated, with 95% of wealth in the hands of 10% of the population.

Gordhan reminded the commission that the projected rate of economic growth was insufficient to reduce unemployment, inequality and poverty, but a stronger growth was needed.

“Given budget constraints, allocating more funds for postschool education would require either reprioritisation of funds away from other programmes or an increase in tax revenues.”

Several groups have put forward the idea of a graduate tax to be levied directly on all university graduates, an idea that offers several potential advantages including targeting private returns for higher education.

However, such tax is unlikely to raise the revenues needed to fund universities, Gordhan said.

About 1.3 million individuals completed their degree in 2011, and about 80 000 students graduated in 2014.

The national Treasury estimates that if each new graduate faced a one percentage point increase in their marginal tax rate, the tax would raise about R200 million in the first year, Gordhan explained.

“If the increase applied to all graduates, it would generate about R3 billion annually. The 26 public universities spent R59.8 billion to operate in 2015.”

Government had set an expenditure ceiling, and the demands on the budget are always greater than the money available, meaning choices have to be made.

Asked whether corruption would alleviate the budget to fund higher education, Gordhan said: “Stopping leakages means more money in the public purse.”