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Universities face new tax over student loans

Australia’s higher education institutions face a heavy and unexpected new tax for every student who takes out a federal loan to cover the cost of their studies.

Under unusual legislation introduced in federal parliament, universities will become liable to pay the tax every year to support the cost of running Australia’s novel student loan scheme.

The government has endured upheaval after dumping its former prime minister Malcolm Turnbull and replacing him with former treasurer Scott Morrison.

It now faces severe political and budgetary pressures but, in what appears to be a last-minute desperate move, has turned Australia’s student loan repayment system into a tax on the universities themselves

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Under the government’s plans, universities would be required to pay a fee to cover some of the cost of the loan scheme.

The decision has alarmed vice-chancellors, not least because of the lack of detail in the legislation and its explanatory memorandum. Equally worrying to the institutions is that the legislation also provides the education minister with broad new powers to impose a tax on all higher education providers.

Universities Australia Chief Executive Catriona Jackson said the scant operational detail in the legislation raised more questions than it provided answers.

This would be a significant change from current legislative funding arrangements. It would place such decisions in the hands of the minister rather than the parliament.

Australia’s novel income-contingent student loans scheme was the first of its kind in the world when it was introduced by the then Labor government in 1989. Other nations have subsequently adopted similar schemes because it overcomes the challenges new students face in finding the money to pay for their first and subsequent years of university study.

Under the Australian system, students borrow from the government to cover the cost of their courses which the universities receive back in federal grants. Continua a leggere