No-fee policy cannot possibly be pro-poor in SA, Davis Tax Committee says
It is ‘simply is not possible to find an additional R60bn to R90bn’ to offer everyone free university education, the committee says in its report
The government could squeeze R15bn more out of taxpayers to pay for tertiary education for promising students from the poorest families.
But it "simply is not possible to find an additional R60bn to R90bn" to offer everyone free university education, the Davis Tax Committee said in its report released on Monday.
The committee suggested raising the additional R15bn by increasing income tax by 1.5 percentage points in the top salary bracket, adding 0.5 percentage points to the skills development levy companies have to pay, and increasing the capital gains tax inclusion rate for corporations from 80% to 100%.
"It is our view that a system of grants [free education] for the poorest students combined with a sliding scale of income-contingent government-backed loans for the missing middle and full-fees for the wealthy is the best workable solution that currently exists," the committee, chaired by Judge Dennis Davis said in the report.
"While it may not be the most politically palatable option, it does provide the largest immediate reduction in financial exclusion for the smallest government expenditure."
The report argued that fee-free higher education for everyone — including the wealthy — is not economically financially possible or desirable in the short to medium future in SA.
"Whatever additional funds can be raised and ring-fenced for higher education should be allocated in an explicitly pro-poor fashion. A ‘no-fee’ policy (apart from being infeasible) cannot possibly be pro-poor in SA."