Goods tax threatens research

August 28, 1998

PLANS by Australia's conservative government to introduce a goods and services tax as part of its sweeping fiscal reforms will add considerably to university operating costs and to the outlays students must make.

Launching a complex tax overhaul, prime minister John Howard said that all Australians would be "winners". But academics and students are deeply sceptical.

The National Tertiary Education Union and the National Union of Students said that despite Mr Howard's assurances, education was not a GST-free zone.

Mr Howard has offered A$13 billion (Pounds 4.8 billion) in tax cuts to an electorate prior to this year's election. He promised that from July 2000, combined with the introduction of a 10 per cent GST, 80 per cent of taxpayers would pay no more than 30 cents in the dollar.

Although mainstream education will be GST-free, courses that do not lead to a recognised degree, diploma or certificate, such as business training programmes, face the 10 per cent tax impost.

The range of recognised institutions and courses that qualify as GST-free, however, will not be finalised for some months. Tuition fees will be exempt from GST, but not materials and equipment.

NTEU president Carolyn Allport said: "If universities have to pay a GST on equipment, materials and purpose-built facilities associated with research, this represents a tax on the future. Government should be investing in university research, not increasing the costs associated with doing it."

The National Union of Students said the prime minister was wrong in boasting that every Australian would benefit. Low-income students spend disproportionately more on goods and services.

The NUS prepared a case study of a "typical" 19-year-old university student receiving a government youth allowance, working part-time and living away from home. This showed that the student would be A$2.33 worse off.

A 4 per cent increase in youth allowance payments plus a small rise in the tax-free income threshold would not compensate for a cost of living increase close to 5 per cent, the union said.

NUS president Rose Tracey said that a GST on textbooks, stationery, photocopying and Internet access will also hit students hard.

"The prime minister's tax reform package will make students worse off," she said. "The government has targeted the compensation package at middle-income families with dependent children under the age of 16. For low-income students and families supporting university and technical and further education students, the government is offering extremely little."

Ms Tracey accused the government of playing a confidence trick on the electorate over its claims of a A$2.3 billion turnaround in the federal budget, which it will use to meet the costs of tax cuts.

Students and their families were footing the bill for the promised tax cuts in the form of higher tuition fees and a falling quality of education, she said. "Will families really be better off when they are are already paying more for their children's education, when the public schools, TAFEs and universities are in crisis, and when their unemployed children are being thrown off income support?" Ms Tracey asked.

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