Tax reform: No to scrapping of TETFUND
THE Tertiary Education Trust Fund, the Student Education Loan Fund and other education-related components of the Nigeria Tax Bill 2024 are ill-conceived, regressive, and anti-people to say the least. The National Assembly, the state governors, the students’ union organisations and the Nigeria Labour Organisation must act fast to rescue the education sector in the public interest by ensuring the provision is expunged from the NTB. It must not become law.
Broadly, The PUNCH supports the tax reforms. Primarily, the four bills will enhance tax operations in Nigeria and rescue the tax system from its primitive, pedestrian past. At between 6.6 per cent and 10 per cent to GDP, Nigeria has one of the worst tax-to-GDP ratios in the world. The Bola Tinubu administration targets 18 per cent tax-to-GDP by 2026. Without tax reforms, this is impossible.
In decent societies, education is funded by a mixture of tuition, grants, loans, scholarships, and endowments. Take the Harvard University endowment, it was valued at $50.7 billion in 2023.
Therefore, The PUNCH Editorial Board does not support the provision to cancel the TETFund for the Nigerian Educational Loan Fund. Education is too important to be left at the mercy of loans alone without other government interventions. Therefore, the Board says no to the scrapping of TETFund for NELFUND.
Section 59(1) of the bill imposes a development levy on the assessable profits of all companies’ chargeable tax under chapters two and three of the Act as follows: 4.0 per cent for 2025 and 2026 years of assessment; 3.0 per cent for 2027, 2028 and 2029 years of assessment; and 2.0 per cent for the 2030 year of assessment.
Thereafter, the income generated will no longer accrue to TETFund and shall be solely for the Student Education Loan Fund.
Subsections 3(a) and (b) specify the distribution of the accruing revenue to TETFund and SELF in a manner that stands logic on its head. TETFund will receive 50 per cent in 2025 and 2026 years of assessment; and 66 per cent in 2027, 2028 and 2029.
In the 2030 year of assessment, TETFund will receive 0 per cent. This is ominous. Thereafter, SELF gets 25 per cent in 2025, and 2026 years of assessment; 33 per cent in 2027, 2028 and 2029 years of assessment, and 100 per cent in the 2030 year of assessment and thereafter.
In the wisdom of the proponents of the bill, TETFund, the interventionist body that has championed the infrastructure, research and development, scholarships, publishing, and publication needs of the country’s tertiary institutions for over 30 years, shall outlive its usefulness in 2030.
This is because the 100 per cent development levy shall go to SELF, which only takes care of needy students who constitute a fraction of Nigerian students. TETFund is however for all students, not a fraction of the whole body of students.
This means Nigeria’s tertiary institutions’ infrastructure, research and development, scholarships, publishing, and publications will be at a standstill from 2030 and beyond. This is warped wisdom for a country whose tertiary institutions, despite TETFund interventions, wallow in a sore development deficit.
While Nigerians consider zero allocation to TETFund “from 2030 and thereafter” as the technical scrapping of TETFund, the Special Adviser to the President on Media and Strategic Communications, Bayo Onanuga, says, “No part of the tax reform bills currently before the National Assembly recommends the scrapping of Tertiary Education Fund.…”
The Federal Government may need to explain to the country the difference between scrapping TETFund and rendering it financially powerless from 2030 and beyond. This is a joke carried too far.
The fate of TETFund is intrinsically tied to the destiny of Nigeria. All the stakeholders, including university staff unions, NANS, parents, and the relevant civil societies must resist this attempt to muzzle the education of the youths.
TETFund, a brainchild of the Academic Staff Union of Universities, and a hybrid of the Education Trust Fund (a rested interventionist body for all tiers of education), is a public university-wide interventionist programme – and later other tertiary institutions – that has lifted the fortune of Nigerian universities from the prevailing rot when it was created.
Owing to this unfortunate state, experts believe that TETFUND has transformed from a supplementary funding source for tertiary institutions to a major source of funding for infrastructure, research and development, scholarships, publishing, and publications in a country where budgetary allocation to education ranges from a paltry 2.0 to 7.0 per cent.
The source of funding to TETFund is 2.0 per cent of companies’ annual profits in Nigeria.
Disclosing that 90 per cent of physical structures in universities, polytechnics, and colleges of education are a product of TETFund, the President of ASUU, Emmanuel Osodeke, warned that “TETFund has been instrumental in transforming tertiary education across Nigeria for over 30 years. Scrapping it would devastate public universities and deny access to education for children from low-income families.”
The Zonal Coordinator of ASUU-Nsukka Zone, Raphael Amokaha, said the impact of TETFund can be felt in 244 public tertiary institutions: 96 universities, 72 polytechnics, and 76 colleges of education.
Despite TETFund’s interventions in the tertiary education subsector, the tertiary institutions still wallow in neglect, which has triggered repeated strikes.
The Federal Government has not serviced a N1.2 trillion memorandum of understanding it signed with ASUU for the revitalisation of universities and payment of earned allowances since 2009. Unwisely, the Federal Government keeps adding new universities.
It is worth asking how SELF will take care of the infrastructure, research, grants, scholarships, and development needs of the old and new tertiary institutions being established by the Tinubu administration.
It is not too hard for Nigerians to see that NELFUND is a smokescreen for this administration’s mercantile approach to education.
When the students’ loans board was introduced last year, it was applauded as a relief for indigent students. But with the attempt to make it gulp 100 per cent of the development levy accruable to educational institutions from 2030 and beyond, students will be given loans to learn in empty laboratories, ill-equipped libraries, dilapidated classrooms and ultimately receive globally uncompetitive education.
The Tinubu administration allocated 6.39 per cent and 7.0 per cent to education in the 2024 and 2025 budgets respectively. These paltry allocations expose Tinubu’s disdain for public education.
It is unthinkable that Nigeria is thinking of scrapping TETFUND, when Ghana has copied the winning formula from Nigeria by establishing the Ghana Education Trust Fund, to transform its education system.
At the basic level, Nigeria’s 20.1 million out-of-school children figure is the second largest globally behind India’s. It is a no-brainer that Nigeria needs more investment in education, not to cut a funding source as it wants to do with TETFund.
The government must correct this misstep and sustain the TETFund to accelerate education development and make education more competitive.
=======By PUNCH ========
