Corporate levy would comprehensively tackle higher education funding crisis

By TUI, Thursday, 13th April 2017 | 0 comments

The Teachers’ Union of Ireland (TUI) has called for the application of a 1% levy on corporate profits to tackle the funding crisis afflicting the Irish higher education sector.

The union has highlighted how such a measure would have raised an additional €549m in funding for the sector in 2015. An expert group reported last year that the sector will require additional annual funding of €600m by 2021.

TUI represents 16,000 members, including over 4,000 members in Institutes of Technology. The union’s Annual Congress takes place in Cork next week.

Speaking today, TUI General Secretary John MacGabhann said:

‘With student numbers set to continue to rise significantly at third level, the already unacceptable effects of the funding crisis on the sector will worsen significantly unless urgent and positive intervention is made. In this regard, TUI believes in the application of a tangible, ring-fenced contribution to higher level funding by corporations, in the form of a 1% levy on profits.

The corporate sector derives incalculable benefit from Ireland’s highly skilled, graduate labour pool which is, to a large degree, the product of the public education system - funded by taxpayers. The introduction of a levy would further enhance the quality of the graduate labour pool, the capacity of institutions to meet evolving need and, ultimately, the sustainability of the enterprises that contribute to the fund.’

Funding crisis/deficit

‘TUI’s call for a levy is broadly consistent with a recommendation of the Expert Group on Future Funding for Higher Education (2016) which identified that a structured contribution from employers should be a core element of future funding for the sector.

At 1.2%, the percentage of GDP spent on higher education in Ireland is far below the OECD average of 1.6%, leaving us trailing behind countries such as the UK, France, Denmark, Norway, Finland, Belgium, the Netherlands and Sweden in terms of investment.

The Institute of Technology sector alone sustained a €190m (35%) cut in funding between 2008 and 2015, with student numbers rising by 21,411 and lecturer numbers falling by 535. The academic staff/student ratio in Institutes of Technology is 23:1, compared to the OECD average of 17:1.

The corrosive effects of cutbacks result in today’s students experiencing unacceptably large class sizes and less access to equipment, materials, libraries, laboratories and tutorials.

Last year’s report of the Expert Group states that in order to improve student/staff ratios, better engagement with students and improved support services, additional core annual funding of €600m will be required by 2021.'

Wholly appropriate contribution

‘Ultimately, students and their families would benefit from such a move, which in addition to improving the education experience, would largely remove the need for a system of income contingent loans.

It also would represent a wholly appropriate contribution by corporations that would allow them counter the perception that they have no allegiance to the society from which they benefit so much.’


Note to editor:

Low rate of corporation tax

At 12.5%, the standard rate of corporation tax in Ireland remains low by international standards, having been reduced significantly in the late 1990s and early 2000s. In this regard, the application of a further 1% would not inhibit inward investment or employment generation. We believe that it would make Ireland an even more attractive location for corporations seeking to access a highly educated workforce.

The application of a levy would have yielded the following additional funding for the sector in recent years:

2011 - €280m
2012 - €337m
2013 - €341m
2014 - €369m
2015 - €549m

It is worth nothing that the calculation above is based on dividing the actual receipts from corporation tax by 12.5, notwithstanding the fact that the effective rate that generates those receipts is less than the nominal rate.

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