The drop of around 30,000 students would decrease tax revenue by at least $840 million per year as productivity falls, according to the peak body’s submission on the Government’s proposal to cap at $2,000 the amount of education-related expenses that a person can claim in one year.
The effective cost of enrolling in postgraduate fee paying courses will increase by at least 30 per cent and by as much as 54 per cent.
Recently the Prime Minister declared the Government’s desire to accelerate a new national competitiveness agenda to boost long term productivity growth involving an ambition to aim for “a productivity number with a `2′ in front of it”. Productivity growth will fall by up to 0.4 per cent per year if the cap is implemented.
“This policy proposal pulls in precisely the opposite direction to the Government’s objective, a point made very clear by the more than 50 groups representing a very large slab of the economy who have come together to form the “#ScrapTheCap Alliance” said Universities Australia Chief Executive, Ms Belinda Robinson.
“This is a counter-productive, ill-conceived and unfair taxation measure.”
Universities Australia’s submission makes clear that the tax cap will particularly disadvantage women, students from low socio-economic backgrounds and those who live in rural and remote regions.
In its submission, Universities Australia provides a simple, efficient and revenue-neutral alternative to the $2,000 cap on education expenses, which would replace the existing $250 non-claimable threshold for work related, self-education claims with a $90 non-claimable threshold for all work related expenses.
This would cost the average taxpayer claiming work related expenses $27 per year.
“Not only would this measure produce the same level of savings as the $2,000 cap in the short-term and increase the revenue stream to government in the long-term, it would do so without affecting the incentives for people to upgrade their skills, education and qualifications.
“It is simple, fair, efficient and vastly superior in policy integrity than the tax on education currently under consideration,” Ms Robinson said.