eNCA | Fees commission findings shifting the burden to the taxpayer: Analysts
JOHANNESBURG – Analysts say a proposed cost-sharing student loan model may hurt the taxpayer.
The fees commission report, released by President Jacob Zuma on Monday, has recommended that banks should make loans available to qualifying students with the state guaranteeing repayment.
EXPLAINED: What the fees commission recommended
Some financial experts say the taxpayer will ultimately bear the burden of defaulting loans.
According to Gary Booysen of Rand Swiss, “With government standing as the guarantor you are just shifting the risk to the taxpayer.
“Unfortunately for taxpayers in general, this is probably a soft way of getting them to pay tertiary education. What will happen if students start to default? And you would see a large number of defaults.”
The Davis Tax Committee says government can use R15 billion more from taxpayers to pay for tertiary education, but it says this can only be used for the poorest students.
The committee has released its latest report looking at various aspects of tax administration.
It’s also found that government’s current proposals for National Health Insurance (NHI) are unlikely to be sustainable without economic growth.
The committee, headed by Judge Dennis Davis, sees no need for a major overhaul of the country’s oil and gas tax laws.
The Fees Commission of Inquiry into free higher education has recommended that billions be redirected from the Unemployment Insurance Fund (UIF towards the Technical and Vocational Education sector.
It wants R50 billion to be ring-fenced for infrastructure development.
The commission says it’s aimed at ensuring these colleges are institutions of first choice.
According to professor Steve Koch of the University of Pretoria, “It’s not practical at all to tap into pension and unemployment funds…Those funds have been contributed to by people that expect to draw on those funds, tapping into funds is not wise.”
eNCA