TUI calls for application of corporation tax levy to highlight higher education funding crisis

By piofficer, Wednesday, 4th October 2017 | 0 comments

Ahead of next week’s Budget, the Teachers’ Union of Ireland (TUI) is calling for the application of an additional 1% levy to corporation tax to create a dedicated fund for investment in higher education.

The union has highlighted how such a measure would have raised an additional €588m in funding for the sector in 2016.  An expert group reported last year that the sector will require additional annual funding of €600m by 2021.

TUI represents over 16,500 serving teachers and lecturers, including over 4,000 members in Institutes of Technology. Last week, Institute of Technology academic staff protested outside colleges, Dáil Éireann and the HEA offices over the funding crisis within their sector.

Speaking today, TUI General Secretary John MacGabhann said:

‘All parties agree that there is a funding crisis blighting higher education in Ireland, and that its corrosive effects will continue unless and until an effective and positive intervention is made.

The corporate sector consistently derives benefit from Ireland’s excellent graduate labour pool which is largely 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

‘Our 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.

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 over the same period.

The 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 the application of the levy TUI is advocating, 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.’

The union notes that corporation tax is payable only in respect of profits made by companies and organisations and that, while the nominal rate of this tax is 12.5% - significantly below the international norm - the effective rate is considerably lower still. Considerations of corporate responsibility, social equity, the maintenance of public funding of higher education and the undesirability of further increasing the cost to students of participation in higher education argue strongly for a tangible and substantial contribution by corporations that is channelled through the taxation system. Such a levy would have generated €588m in 2016.’

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:

2012 - €337m
2013 - €341m
2014 - €369m
2015 - €549m
2016 - €588m

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