SA businesses could be forced to pay a 1% ‘graduate tax’

17 November 2015 | Economic factors

The government is considering ways to fund tertiary education in South Africa, which includes business paying an additional 1% tax.

This is according to Business Report, which said that a number of other options are being considered including a scenario where the government acts as a guarantor for student loans.

Spokesperson at the Department of Higher Education and Training, Khaye Nkwanyana, said: “We want to introduce an additional tax, maybe it will be called graduate tax, of 1%, which will be ring-fenced and go to the Treasury to cater exclusively for training young people in university education.

“Training for higher education cannot be deducted from the current skills levy and the fiscus has no money for free higher education for the poor,” Nkwanyana said.

Businesses are already taxed 1% for a ‘Skills Development Levy’ which funds government’s Sector Training and Education Authority (SETA) programme.

The most recent tax statistics bulletin from the National Treasury and the SA Revenue Services (Sars), shows that corporate income tax (CIT) was the third largest contributor to total revenue for 2014/15, at R186.6 billion.

Last month, President Jacob Zuma announced that there will be no fee increases in universities for 2016, following mass protest on campuses countrywide under a campaign: #FeesMustFall.

The shortfall in university income for 2016 is estimated to be in the region of R3 billion, as a result.

Higher Education Minister, Blade Nzimande, recently said that the aim of government is to provide free education at a tertiary level for poor students – not for everyone. “As a country we cannot afford this for everyone. Those who are wealthy must pay,” he said.

However, the minister then said that free education at a tertiary level can be achieved, but only with the assistance of the private sector.

In an interview with the education minister, eNCA teased out a number of R37 billion required to roll-out free university over the next three years. However, the bulk of these funds would need to come from the private sector.

At the end of October, Economic Freedom Fighters leader, Julius Malema, marched to the Johannesburg Stock Exchange to hand over memorandum.

Among the many terms within that memorandum, was a call for every company on the JSE to adopt a minimum of 100 students and assist with their higher education and training programmes and bursaries from registration, tuition, residence, food, books, and transport money for their adopted students.