Tuesday July 8 2014

Educate school owners on Income tax

Since the Budget speech, I have read about and watched several press conferences by school directors and administrators protesting the proposed Income tax on private schools. They seem to think that the proposed tax will be levied on the fees collected per student.

Many of them have threatened to increase school dues if government does not drop this proposal. But, the proposed tax is an income tax that is charged/levied on the surplus/profit of an entity for the year after all the allowed pre – tax expenses have been deducted. This tax does not increase the cost of operations of the schools and, therefore, threats of increments in school dues are baseless and unfounded.

Actually, a move to increase dues will be a thorn in their own side because it widens the tax liability and unnecessarily hikes the cost of education.

Whereas private school proprietors should denounce the alleged unconstitutional taxes charged on them by local governments like ground rent, this Income tax must be paid because very many schools make huge profits that have been going tax free. In fact they have enjoyed favours/tax holidays for close to two decades. The same policy should also apply to government-aided schools not under Universal Secondary Education and tertiary institutions that operate in profits.

This is one way the domestic revenue base can be widened. While I sympathise with school directors for reductions on their dividends, they should be patriotic enough to support government in national development strategies because they also need to work in an enabling environment where there is peace, security good infrastructure, etc, like any other business. We must do away with foreign aid because it has strings attached. We may not achieve it now but, this is a bold step in the right direction.

Amir Wamala, awwamalaamir25@gmail.com