A zero percent fee increase for 2016 must be of little comfort to a student has no hope of paying the 2015 fees. So now we desperately need to find some immediate solutions for 2016. While government finds out a way to compensate universities for R3bn in lost fees.
So here’s a simple solution that I reckon could help 25 000 students or more in 2016.
Universities are tax-free instituitions, similar to government, municipalities and other public benefit organisations? Right. That means they pay no tax? Wrong! Universities only enjoy an income tax exemption.
Municpalities and PBO’s are exempt from paying the 1% SETA levy on payroll. Universities do not get that exemption!
So Universities receive somewhere around R100 bn a year from fees and government grants. And they then spend lets say 75% of that on salaries. That’s R75 billion. And incur roughly R750 million in SETA levy liability. This all forms part of the R15bn annual SETA collections.
20 percent of the SETA levies ( about R3bn pa) is then paid to the national skills fund. That does help many poor students get to university. Then around 10%, R1,5bn is sucked aside to pay for the SETA administration. And the remaining R10 bn or so is supposed to be spent on SETA mandatory refunds and discretionary payments. But the claim process if so cumbersome that many employers just give up. It’s not worth the effort.
I am sure that the minister of education is looking to increase SETA levies next year to pay for the current mess.
So think again. Exempt the universities from SETA levies. That puts R750 million straight back into the universities. Careful now. The exemption must not be granted in part payment of fees lost due to the zero percent increase. There is a danger of that.
The value of the exemption (R750 million) must be spent on targeted scholarships for poor students. (Just as municipalities are required to spend the equivalent of their exemption on training.)
So if R750 million is split into R30 000 grants, we have just helped 25000 students by creating a simple and justified tax exemption.
Or am I missing something?
We could also get the students involved in administering the scholarship scheme. And that would do little harm in the context of the overall transformation debate.