Public Universities might soon find a solution to the problem of cash shortage if parliament approves plan to tax HELB loans and send the money directly to the universities.
The wide-reaching reforms seek to have HELB loans taxed, and the money sent directly to the university. Students receiving HELB loans will thus receive the amount less tax amounts, which will go to KRA. Treasury will then forward the monies to the respective universities.
The plan will see all HELB loans taxed at a flat rate of 26%, money which will be directly channeled to the Universities. This will increase the capitation per student by more than 10%, something which Vice Chancellors have been fighting for.
“This is a multifaceted solution that will achieve a number of purposes,” said commissioner of domestic taxes. “Universities will get more money, hence, higher quality services. This will result in full baked graduates. On the other hand, the student will learn about taxes early enough, making them tax ready by the time they graduate. The benefits are immense.”
Universities in the Red
While taxing loans is not a new thing for government that are choking in debt, experts have questioned if the student will cooperate willingly. However, the money will be taxed before disbursement, hence loanees will not have a say in the matter.
According to the auditor general, public universities are choking in debt with some on the verge of bankruptcy. A tax on HELB loans might be the much needed shot in the arm for the universities.
Cut out the middleman by joining our Telegram Channel below.