NZ to introduce levy on international fees

May 24, 2002

New Zealand universities face a compulsory levy on their revenue from international students.

The levy, which is likely to be introduced next year despite opposition, will see institutions pay 0.5 per cent, later rising to 1 per cent, of their international student revenue.

Universities, which said the cost would be passed on to students, have called the levy ill-defined, inequitable and unnecessary.

The government will use the receipts to support export education initiatives such as marketing, quality assurance and scholarships.

The export education sector has grown rapidly in New Zealand. Student numbers have doubled since 1998, and the industry contributes about NZ$1.1 billion (£350 million) to the economy, including NZ$400 million in tuition fees.

Steve Maharey, the minister responsible for tertiary education, said the levy would be used to build on New Zealand's strong reputation as a provider of quality education.

The New Zealand Vice-Chancellors Committee is not happy with the levy. It estimates that universities will contribute about NZ$700,000 a year but stand to gain little in return.

"Universities already invest heavily in their own export education programmes and do not wish to direct significant funds towards ill-defined central priorities," the NZVCC said in a submission to a select committee hearing on the levy. The vice-chancellors argued that the costs would be passed on to international students through increased tuition fees and that it would have been simpler to have placed a flat surcharge on student visas, as Australia has done.

As the government already takes NZ$125 million in tax from the sector, the government should fund any initiatives out of general taxation, they said.

Stuart McCutcheon, vice-chancellor of Victoria University of Wellington, described the levy as a "tax on success".

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