Monday June 16 2014

MPs reject tax on private schools

By Yasiin Mugerwa

Parliament- MPs supposed to have a final say on the proposed taxes in the 2014/15 Budget have announced they will reject a proposal by government to tax private schools, saying the measure would burden parents and add pressure on the already crowded universal institutions.
The lawmakers and civil society activists under the Civil Society Advocacy Budget Monitoring Group (CSABMG), said by taxing private schools which are supplementing government efforts, Finance minister Maria Kiwanuka was trying to “bite” more than she can “chew”.

“It is ludicrous that the government is proposing to cannibalise the same private schools that are helping to close the gaps in the education sector,” Mr Theodore Ssekikubo (Lwemiyaga) said.

Mr Reagan Okumu (Aswa), Mr Wilfred Niwagaba (Ndorwa West) and Ms Mariam Nalubega (Butambala Woman) said the tax at a time when the government does not have schools in some parts of the country would increase illiteracy and discourage investments in the education sector.
Under the Income Tax amendments, the minister wants to terminate exemption on income derived from educational institutions.

“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 enhancing compliance by bringing more taxpayers into the tax net,” Ms Kiwanuka said during the budget reading last week.

The executive director of Coalition of Private Schools Teachers, Mr Patrick Kaboyo, warned that if Parliament approves the tax, “parents are going to bear the brunt as schools charge outrageous fees”.

The MPs have also rejected plans to terminate the Value Added Tax waiver on zero-rated supplies under the Third Schedule of VAT Act with effect from next month.

Under this the minister is targeting the supply of printing services for educational materials
“We are going to fight any attempts to tax education services because this is not a luxury,” Mr Haruna Kyeyune (Kyotera) said.
“If government wants money to finance the budget, let it increase taxes on things like gambling, cigarettes and beer but not education, agriculture and other essential commodities like paraffin and salt,” he said.

Ms Cissy Kagaba, a member of CSABMG, said the proposal is a way of raising the tax base but will also negatively affect the fees structure hence increasing the burden on UPE because some parents may not afford increased fees.

“Those in private schools will drop to UPE which already faces quality issues, hence creating a bigger group of poorly educated youth who are unemployed and can’t compete with other East African counterparts,” Ms Kagaba, also the executive director of the Anti-Corruption Coalition Uganda, said.

The government argued then that the policy was not to introduce major tax proposals but instead provide stability for the tax system as an incentive to investment.