Impact of Wike’s 5% Tuition Fee Tax: Does the Minister Want to Kill Education in the FCT?

In the heart of the Federal Capital Territory (FCT), a storm is brewing over Minister Wike’s proposal to impose a 5% tax on students. On Monday, the private school associations convened at Roberto Schools in Wuse 2, Abuja, to vehemently condemn this proposition. While it is understandable that the new FCT leadership is exploring avenues […]

In the heart of the Federal Capital Territory (FCT), a storm is brewing over Minister Wike’s proposal to impose a 5% tax on students. On Monday, the private school associations convened at Roberto Schools in Wuse 2, Abuja, to vehemently condemn this proposition. While it is understandable that the new FCT leadership is exploring avenues to generate revenue, the potential ramifications of taxing schools and parents demand a closer examination.

Background and Context

The FCT, under Minister Wike’s guidance, is seeking diverse means to bolster its financial resources for administrative purposes. However, the proposal to impose a 5% tax on students has sparked concerns within the private school sector. This column seeks to explore the potential consequences of such a tax and as a teacher and former head of a school myself, I urge a reconsideration by the minister on account of the following six points.

Economic Disparities: Lessons from Elon Musk’s Tax Break

A glaring comparison emerges when we juxtapose Wike’s proposed student tax with the recent tax breaks granted to Elon Musk. At the same time private schools were holding their meeting in Abuja, the world’s wealthiest man received $10 million in property tax breaks for his substantial $700 million investment in Atlanta, focusing on the development of a data centre for Twitter, now known as X. This strategic move aimed to encourage investment, projecting a potential $16 million in revenue for the city over the next decade.

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In contrast, what comparable incentives has the FCT offered to its schools? The absence of such encouragement raises questions about the government’s commitment to fostering educational growth and development.

Private Schools as Key Contributors to Employment

The private school sector in Abuja stands out as a major employer, with some institutions rivalling other businesses in terms of workforce size.

Private schools in Abuja are probably the biggest employers of labour in the FCT. When I was head of school, we had over 200 staff – from the ladies cleaning the classrooms to the gardeners to the teachers and consultants.

The compensation packages offered were not only competitive but, surprisingly, some private school teachers earned more than their counterparts in university professorships.

Consider the ripple effect of taxing these educational institutions. An upset in this delicate balance could lead to widespread disorder and increased illegal activities, as businesses burdened by encumbrances may resort to employee layoffs.

Imagine an FCT without employment provided by schools. That would be a federal capital that will quickly degenerate into chaos and criminality.

Financial Strain on Parents

With economic challenges on the rise, the additional financial burden imposed by the proposed tax on schools is likely to be transferred to parents. In an era where incomes have remained stagnant while the cost of living has steadily increased, the majority of parents are barely hanging by a thread, struggling to afford basics such as food, rent, and transportation.

It raises a fundamental question: What should the government prioritize — revenue generation or creating a conducive living space for its citizens?

Operational Costs: Challenges Faced by Private Schools

Running schools in the FCT already incurs substantial costs. Many institutions grapple with unreliable grid electricity, necessitating reliance on generators. The expenses associated with this alternative power source can be exorbitant, with some schools reporting weekly expenditures surpassing N1 million.

At our school, we were spending N800,000 per week on electricity. Then it crossed N1 million. I don’t know how much it costs now.

Furthermore, private schools often find themselves lacking essential infrastructure and services that fall under the purview of the government. From roads to central sewage systems, these institutions bear the responsibility of their security and often hire police personnel to protect students.

While acknowledging the government’s efforts, it prompts us to question the adequacy of the support provided to educational institutions. In other words, I’m not saying the government is doing nothing for schools but can you help me count them?

Social Mobility and Community Impact

Five, besides providing education for those who can afford it, these schools play their role in helping underprivileged kids with social mobility. There’s a school in my estate that has enrolled the child of the cleaning lady in the same school. Our own school did the same. To say nothing of the orphans on scholarships and the discounted fees for the teachers’ children.

Studies consistently show that children receiving such an education are more likely to lift their families from the lower rungs of the socioeconomic ladder, contributing to a more equitable society.

Recognizing Existing Financial Contributions

Contrary to the perception that private schools do not contribute to government revenue, they do pay various taxes. Annual fees ranging from N75,000 to 300,000 to the Department of Quality Assurance (DQA), signage fees, and other associated charges constitute a significant financial contribution.

Moreover, the employees of these institutions contribute to government revenue through Pay As You Earn (PAYE) taxes. For instance, at my previous school, the annual PAYE tax amounted to a substantial N11 million per annum.

Conclusion: A Call for Consideration and Dialogue

In summary, the government’s proposition to impose a 5% tax on students three times a year raises logical concerns. Instead of burdening students and their families, the government should consider providing grants to educational institutions for the valuable services they already offer.

This column advocates for a nuanced approach that balances the government’s financial needs with the critical role private schools play in shaping the educational landscape, fostering employment, and contributing to social mobility. A more comprehensive dialogue between the government and private school associations is imperative to ensure that educational growth remains a shared goal without compromising the well-being of students, parents, and the larger community.