Tax on colleges likely to affect education quality
Tax on colleges likely to affect education quality
JAKARTA (JP): The government's plan to start taxing higher
education institutions could have negative consequences on the
state of education in Indonesia, a leading college administrator
says.
Bunyamin Ramto, the chairman of the BMPTS, the communication
forum encompassing all private higher education institutions,
warned on Saturday that the tax could force some colleges to
close down, or, in the case of the larger colleges, to reduce the
range of subjects they offer in order to cut costs.
He said many of these private colleges are already suffering
financial losses, others are barely breaking even.
"Most private universities, especially those outside Jakarta,
have not even reached the break-event point," Bunyamin said.
"The tax would deter their efforts to enhance the quality and
quantity of education services", he told reporters after meeting
with other forum executives.
He said the more established universities use their financial
surplus to subsidize faculties that are not profitable.
The Ministry of Finance early this month sent around a
circular to remind all the foundations managing private colleges
that they all, with no exceptions, must pay income tax for
virtually all revenues generated .
The circular said that admission fees, administration fees,
tuition fees and all other incomes derived by colleges will be
subject to income tax beginning this month. The rule is based on
the newly-revised 1994 tax law. Previously, foundations were
exempt from income tax.
Private universities and colleges have been meeting the
increasing demand for higher education services because of the
limited number of seats at state-run universities.
They are still widely seen as a second choice for most
students because, with the exception of one or two, they are
considered inferior to state-run universities.
Their tuition fees are also higher than those charged by state
colleges, which receive government subsidies.
One leading private university in Jakarta, for example,
charges between Rp 4 million ($1,700) and Rp 8 million ($3,500)
for admission to its school of economics. It charges another Rp 4
million in annual tuition fees.
In contrast, the University of Indonesia charges a Rp 400,000
admission fee and another Rp 400,000 in annual tuition fees.
Bunyamin explained that a university normally reaches its
break event point if it has at least 6,000 students.
"Universities with less than 6,000 students usually seek
support from other sources such as donors, foreign aid, or bank
credits," he said.
There are currently 1,159 private universities and colleges in
Indonesia, most of them with less than 6000 students, he said.
In Jakarta, only a small percentage of the 189 private
universities and colleges are breaking even, he said. "The
condition outside Jakarta is even worse, with many running with
only 1,000 students or so".
Bunyamin said the forum which he chairs is still studying the
full effect of the tax.
He said he hoped the government would reconsider bearing in
mind the role that private universities and colleges play in
providing education in the country.
He denied that these foundations are raking in profits from
running the universities, saying that any profits go toward the
building of new facilities and to hire lecturers.
The tax, if imposed, would block efforts to improve education
in Indonesia, he added. (03)