Graduation tax ‘won’t be enough’

The Treasury appears to have put a nail in the coffin of a graduate tax, saying the funds raised would not be nearly enough to cover the running costs of universities.

Finance Minister Pravin Gordhan did, however, announce an additional R5-billion in funding, in addition to the R32-billion announced in last year’s budget, to be made available by 2019.

His budget will see a R31-billion allocation in university subsidies, R21-billion for skills development levy institutions, R15.3-billion for the NSFAS and R7.4-billion for technical and vocational training.

Gordhan said the government was determined to address the challenges identified in post-school education and training in a phased manner.

“Resources will be taken into account in determining the pace with which these can be addressed,” he said.

Eastern Cape universities welcomed the additional allocation of funds, saying the amounts allocated were fair within the constraints of the current budget.

NMMU’s executive dean of Business and Economic Sciences, Dr Ismail Lagardien, said the budget allocation took into account that the country needed university graduates as well as technical skills graduates.

“I would suggest that we spend more on skills development and on technical and vocational training,” he said.

“Sure we need managers and administrators, but the most successful societies, across time and place, have been based on being able to produce things like food, clothing and homes.

“I can’t say with complete certainty that there will be no objections to these allocations. The line for people who want less money is very short.”

Rhodes University spokeswoman Veliswa Mhlope said the increased budget would not only enable them to continue offering quality education within a financially sustainable framework, but also contribute towards ensuring that academically deserving students were not excluded from institutions of higher learning for financial reasons.

“Access to education remains a huge challenge for the poor majority in our country,” she said.

“We need to continue to engage each other … to find affordable and sustainable mechanisms of addressing this challenge while safeguarding the quality of public higher education.”

While Gordhan’s speech outlined the need for universities, students and education stakeholders to share responsibility for access, quality and the diversity of higher education provided, the budget review document outlined how a graduate tax was unlikely to assist with the financial needs of the higher education sector.

The document states that the idea offers several potential advantages, including effectively targeting private returns to higher education.

However, it says the Treasury estimates that about R200-million would be raised if the tax was levied on new graduates.

If it were applied to all of South Africa’s graduates, it could generate about R3-billion annually – a fraction of the R59.8-billion spent by the 26 universities in 2015.

Treasury director-general Lungisa Fuzile said at a media conference ahead of the budget speech that the government had pumped an enormous amount into higher education but that “difficult conversations” needed to be had about inefficiencies in the education system.

“We can’t keep pumping money into a system that falls short in providing the skills we need. Are we getting the best we can for every rand we spend in education?” he said.

One thought on “Graduation tax ‘won’t be enough’

  • February 23, 2017 at 8:30 am

    surely it should be made clear that ALL South Africans cannot become graduates or go to Varsity.
    If they want to go to varsity, they must pay for it like everyone else had to in the past. Youngsters would work after hours to pay for their studies


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