While Higher Education Minister Kim Carr has re-opened consultations on the Gillard Government proposal, he has not made any commitment either way.
While Higher Education Minister Kim Carr has re-opened consultations on the Gillard Government proposal, he has not made any commitment either way. Callum Bentley

Education tax cuts could hit economy hard

THE national economy could take a $2.8 billion hit if the Rudd Government proceeds with plans to cap work-related education tax concessions, new modelling has revealed.

Completed for Universities Australia, the economic modelling also shows post-graduate full fee student numbers could fall as much as 30% over the next four years if the cut remains.

Announced before Mr Rudd was returned to the Prime Minister's Office, the change in policy would cap tax concessions for work-related education expenses like TAFE courses at $2000 a year for all Australians.

If the cut is not abandoned, modelling has also shown the fall of up to 30,000 students across the country could hit the Federal Government's own budget by up to $840 million a year as productivity falls.

An election-year submission from UA to the government also said the cost of enrolling in post-graduate study could rise by between 30% and 54% as a result of the policy change.

While Higher Education Minister Kim Carr has re-opened consultations on the Gillard Government proposal, he has not made any commitment either way.

UA chief executive Belinda Robinson said the proposal "pulls in precisely the opposite direction to the government's objective" of improving productivity.

She said that point was made very clear by more than 50 groups "representing a very large slab of the economy", who had formed a Scrap the Cap Alliance.

The UA submission also found such a tax concessions cut would also hit women, students from low socio-economic backgrounds and those in rural and remote regions worse than others.

Instead, the lobby group proposed replacing the existing $250 non-claimable threshold for work-related self-education expenses with a $90 limit on all work-related expenses, costing all taxpayers about $27 a year.

Ms Robinson said that measure would create the same amount of government savings, but would not effect the incentives for people trying to upgrade their skills and education.

"It is simple, fair, efficient and vastly superior in policy integrity than the tax on education currently under consideration," she said.



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