- The education sector is a crucial part of Nigeria that requires all the financial assistance that it can get.
The Nigeria tax administration has received a call to increase Nigeria-Education Tax to 10 Percent to help manage the sector and aid its perpetual growth.
It is important to recall that for a long time now, educational institutions have been receiving a 2.5% education tax that has gone a long way in caring for their financial needs.
Call to Increase Nigeria-Education Tax to 10 Percent: More on the Call
To help remedy the infrastructure shortage in Nigeria’s tertiary institutions, the Academic Staff Union of Universities (ASUU) has called upon the government to raise the education tax from the current rate% to 10%.
During the recent unveiling of 50 books published by Nigerian authors and sponsored by the Tertiary Education Trust Fund (TETFund) in Abuja, ASUU president, Emmanuel Osodeke implored the federal government to come to the institution’s aid by augmenting the financial assistance that it has provided for years.
ASUU president, while appreciating the Buhari-led administration for all it has done for education institutions, made a case for an increase in the education tax.
He argued that this would help to empower TETFund in its efforts to deal with the infrastructure deficit in tertiary institutions across the country.
According to Emmanuel, the government’s proposal to increase tuition to raise funds for the institutions is not going to work as most students won’t be able to afford it.
Instead, he proposes that the government tax companies at a higher rate to provide for educational institutions.
The Education Tax
The education tax is a tax that is imposed on the profits of all companies registered in Nigeria to help finance education institutions.
It is regulated by the Tertiary Education Trust Fund (TETFund) Act of 2011.
The funds gotten from taxing these companies are used for rehabilitation, restoration, and consolidation of tertiary education in the country by TETFund.
ASUU Commends Buhari
Emmanuel praised the Buhari-led administration for purposefully increasing the education tax twice.
In 2022, the tax was raised from 2% to 2.5% and in the current Finance Bill, the President has made provisions to increase it to 3%.
He also commended the president for standing his ground in the face of pushback from NECA about the issue of multiple taxations and the unfavorable operating environment.
He continued that the present administration has done a lot to help educational institutions and encouraged them to continue to do more.
He remains hopeful that the government would eventually be able to increase the education tax from the current rate to the desired 10%.
Tax Experts Condemns ASUU’s Appeal For An Increase In Education Tax
Tax experts have condemned the Academic Staff Union of Universities’s plea for the government to increase the education tax.
An appeal that was previously made to the government by the ASUU President, Prof Emmanuel Osedeke, to raise the education tax from from the current rate to 10% has been criticized by Taiwo Oyedele, a Fiscal Policy Partner and Africa Tax Leader, PwC.
The tax specialist started by pointing out that the tax was raised from 2.5% to 10% in the previous year.
He then noted that the accumulation of all the taxes imposed on companies is already on the high side without adding an increment.
This is already placing a heavy burden of taxation on companies that are obligated to pay these taxes.
Oyedele continued that the education tax is currently higher than the companies income tax and doesn’t need to be raised any further.
He then explained that raising the education tax is not a solution to the sector’s financial problems, instead, there should be a thorough assessment of how the acquired funds are spent and a better appropriation for the education tax received.
Another critique was the Chief Executive Officer of the Financial Derivatives Company, Bismark Rewane, who condemned the plea for education tax increase and pointed out other means of generating funds for the education sector.
Regarding the students’ loan scheme being suggested by a presidential candidate, Rewane opposed the idea stating that it is not a great idea to lend students money for education when there is no assurance of employment.
He then encouraged the government to set up means such as scholarship opportunities, grants, and also bursaries from the government and private firms.
The above explain all shades that needs to be known about the proposed increment.
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