Why tax waiver for private schools won’t lower school dues

Jun 17, 2008

Last week, Finance minister Ezra Suruma announced an income tax waiver for private schools. <b>Arthur Baguma</b> examines whether this will help lower the fees parents pay to schools for their children’s education...

Last week, Finance minister Ezra Suruma announced an income tax waiver for private schools. Arthur Baguma examines whether this will help lower the fees parents pay to schools for their children’s education...

AFTER the Government waived income tax for private educational institutions, public expectation was that the money would be directed towards improvement of serives. For a long time the institutions cried out over heavy taxation, yet they make little profit. But is this money likely to cause a significant reduction in the fees parents pay per term?
Private schools are already saying the fees structure will not change. Will the money the schools have been exempted from be re-invested to improve standards in schools? But a school proprietor who preferred anonymity said on average, a school was paying between sh500,000 and sh1m. “This is too little to make a significant impact on the fees structure.”
The education ministry, however, anticipated this. Namirembe Bitamazire, the minister, said sh2.5b has been earmarked for inspection. “Private schools will be our main focus. We shall go after schools operating below minimum standards and take disciplinary action or force them to comply,” Bitamazire warned.
Moses Otyek, the acting director of the Directorate of Education Standards, says they will ensure that more inspectors are deployed on the ground, especially at the district level. “With more funds, we shall have more presence of inspectors. You cannot talk of quality education without effective monitoring of schools. We are going to emphasise compliance by all schools, especially in infrastructure and safety standards,” Otyek noted.
Ezra Suruma, the finance minister, also allocated a lion’s share of the national budget to the education sector.
Education experts argue that the claim by private schools that they do not make good profits is baseless. “No private school should lie that they don’t make profits. They would close down. Most of these schools are acquiring loans to expand. And to get a loan from a bank, you must present the school as a viable project that is generating income,” argues Fagil Mandy.
However, James Kubeketerya, the chairperson of the parliamentary social services committee, argues that going after private schools to dictate how they spend their money is an infringement on their business rights. He advises that since most of the private schools, especially those in Kampala, meet the set standards, the money should be used to increase salaries of teachers. “I don’t think the owners of these schools are just going to pocket the money,” Kubeketerya says.
Analysts, however, say the major problem of private schools is the exorbitant fees they charge. “Their fees are above sh500,000 per child and we have very few Ugandans who earn that amount,” says Augustus Nuwagaba, a senior lecturer at Makerere University. As a result, Nuwagaba says, private schools remain a far cry for an average Ugandan.
Could this trend change following the slashing of taxes? Owners of private schools chose to tread carefully on the matter: “The school fees might not change but the quality of education should. The money should be diverted to improve the learning environment,” says Latif Ssebagala, the proprietor of Kisaasi College. His view is echoed by Henry Ssenyondo, the director of Central College Mityana. Ssenyondo also rules out the possibility of lowering the fees: “Essentially, the waiver will help schools get scholastic materials like textbooks and laboratory equipment, and maybe increase teachers’ salaries,” Ssenyondo notes.
Aggrey Kibenge, the education ministry spokesperson, says the development will lower the cost of education over time. He says the Government has played its role in meeting a long-term demand from private schools. “For Universal Secondary Education (USE) and Universal Primary Education (UPE) to succeed, private education providers are needed. With time this measure should be able to lower the cost of education - an ultimate goal of the Government for everyone to afford education,” he concludes.
Many heads of private schools Education Vision talked to say the development was long overdue, but cautiously warned that parents should not expect a cut in school fees overnight. Ssebagala said: “We as administrators of private schools should ensure that the impact is felt by the parents and pupils.”
Suruma expects that the tax foregone will be re-invested in the institutions to provide better facilities and improve school curricula.
Implementation of the UPE and USE programmes to achieve the target of universal completion of secondary schooling by 2015 remains the Government’s priority for the education sector in the new financial year.

The Government plans to increase the efficiency and the quality of UPE and USE by strengthening the Directorate of Education Standards to undertake inspection and stop wastage and misuse of resources.
Mandy agrees that more support to the inspectorate is good news. “There has been an outcry that the inspectorate is not working, but now that they have more money, we shall have more vigilance in ensuring standards in education,” he noted.
Kibenge notes that the rise in funding may help improve the sector, but the needs and demands remain as far as improving quality and sustaining mass programmes like USE and UPE are concerned.

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