Why Raise School Fees?

Ever since the Minister of Finance read out the Government of Uganda’s Budget proposals for the financial year 2014/15, we have been treated to numerous threats by the some proprietors of Private Schools under the umbrella body of National Private Educational Institutions Association (NPEIA) to increase the School Fees charges. This came up as a result of the Government proposing to remove the Income Tax Exemptions currently enjoyed by the Educational Institutions.

As a parent I feel insulted by these continuous attempts to blackmail not only the Government but we parents into joining the crusade of these capitalists involved in our education industry. Do they think that they are dealing with illiterate parents who have no understanding of how the taxation system works? Do they somehow wish or hope that as parents we shall rise up based on mere emotions and lack of proper comprehension of issues to back their pleas?

Having read the Minister’s budget speech in its entirety, she stated; “… I propose to terminate the exemption on income derived by a person from managing or running an educational institution for commercial gain. This is consistent with the principle of equity and transparency in tax regime, and broadening the tax base by bringing more tax payers into the tax net.”

With all due respect and knowing that the proprietors of these institutions are all out to contribute to the Educational advancement of our population, why would one not want to pay tax on income accrued as a result of pursuing this agenda? Working class Ugandan citizens are taxed left right and center and Income Tax is one of those that they do not survive. While the Government might have given the Education industry a tax break in this regard, it didn’t mean that it would last a life time. Besides, the challenges that brought up this decision years back by Government to waive income tax seem to be no more. The proprietors of these institutions should just be ready to file their income tax returns and pay up.

I don’t see an argument of being over burdened by taxes as holding water. This tax only applies to those schools that are making profit. If no profit is made, then it doesn’t apply. This therefore means that the so called struggling schools will still not fall victim to this tax.

To simplify this, add up all the School income from school fees and any other sources then subtract expenses like costs of feeding, salaries for Admin, teaching and support staff, utilities, Local taxes among others. Whatever remains is expected to be the profit and that is what the 30% Income Tax is applicable to. Profits after expenses belong to the business owners and that is probably the bone of contention to many who have been enjoying a free ride making massive untaxed income.

Another argument that is being forwarded is one of loans that are even causing some of the schools to close. The performance of a school in regard to loan repayment cant be directly attributable to the existence or lack of Income Tax. In Uganda, most financial institutions lend against assets. It is highly unlikely that a school with assets worth Ushs 100 Million will be given a loan of Ushs 1 Billion.

It is a good idea for all actors in the Ugandan economy to realise that as we move towards full funding of our national budget, we have to bear the brunt of raising the much needed financial resources. This definitely might mean us remaining with less in our pockets in the process but lets avoid looking for scapegoats. Increasing school fees by the proprietors is not the solution to the Income tax resumption on the industry. Let the business owners readjust their expectations and those that have been stashing away massive profits, its the time to share the loot with Government. As for that poor struggling school that hardly makes a profit, they have no reason to be bothered by this tax resumption.

Fellow parents, let us not be drawn into this well orchestrated scheme by a few who want to continue earning untaxed income. Any school fees increments should be justified with facts.

@wirejames

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