Private universities cry out for tax exemptions after failing to pay salaries

“Now, more than ever, government  needs private universities tax exemptions” says Professor AB Kasozi, an educationist and former executive director of the Uganda National Council for Higher Education.

KAMPALA — The impact of the coronavirus lockdowns on the financial health of private universities and other institutions in Uganda has emboldened calls for tax exemptions to prevent the institutions from going under.

“Now, more than ever, government needs to realise the need to exempt private universities and other institutions of higher learning from specific taxes,” said Professor AB Kasozi, educationist and former executive director of the Uganda National Council for Higher Education. “The institutions offer a public service [education]. A number of them are private not-for-profit. And government needs to hold their arm so they can stay afloat.

“I have always said that they [government] shouldn’t tax education institutions [including private institutions]. If anything, government should subsidise them. This need is more urgent today with the impact of coronavirus [devastating many of the universities],” said Kasozi.

Uganda has 45 private universities, but many of them are struggling to cope in the coronavirus crisis.

Some can no longer meet their bills, let alone pay their teaching staff after disruptions to the academic year induced by COVID-19.


Private universities struggling to stay afloat

Professor Badru Kateregga, vice-chancellor of Kampala University, said private universities were struggling to stay afloat.

“[The] semester had just started when the government closed all education institutions [to lessen the spread of coronavirus]. And you know our students: a number of them come from very humble backgrounds and they hadn’t paid [tuition fees]. It is really hard, what we [private universities] are going through,” Kateregga told University World News.

Private universities cry out for tax exemptions after failing to pay salaries

And much as students are at home, the institutions of higher learning have obligations they still have to meet.

“We still have to pay for utilities: for electricity, water, internet, etc. When you hear that your [teaching] staff don’t have money for food, what are you going to do? You have to take a [bank] loan and pay them,” he said.

Even when the lockdown is lifted and government opens universities, the academic administrator does not expect any instant relief.

“Our parents have not been working. So where do we expect our students to get tuition money from? Life isn’t going to be the same as we knew it,” he said.

A number of private universities and other institutions of higher learning were struggling even before the advent of COVID-19, in part because of limited resources and tax levies on the institutions.

Private universities face deeper financial challenges


But the pandemic, which is wreaking havoc on every aspect of life, has exposed deeper financial challenges for the institutions of higher learning, with some furloughing staff and informing lecturers in internal memos that they are unable to remit salaries for the duration of the lockdown or until students return.

“We [private universities] would want government to waive some of the taxes we pay to enable us to stabilise,” said Kateregga.

Rev Dr John Senyonyi, vice-chancellor of the Uganda Christian University, has in the past called on government to exempt private institutions of higher learning from certain taxes to enable the institutions to grow and to boost the quality of learning.

President Museveni early this year also called for a review of the tax policy in the country, whereby private education institutions would be exempted from certain taxes, including value added tax.

Museveni said the funds could be used to improve the curriculum. “I don’t think taxing universities is a good idea. Let them [universities] use the money to develop their science laboratories and other projects.”

But Fagil Mande, educationist and former chairperson of the Uganda National Examinations Board, said universities and other private institutions of higher learning could not be exempted from taxes simply because of the current COVID-19 crisis.

“You cannot say you are going to implement tax exemptions on some of these universities because of the current crisis. That would be a wrong approach,” said Mande. “The crisis is affecting everyone, including government.”

“Many things are fundamentally going to change and we have to first study these private universities to understand how much they charge students, the programmes they offer, the quality of their education, who is inspecting them, and how much their expenditure is before we can think of tax exemptions,” said Mande in an interview with University World News.

“The immediate questions should be: how are we going to handle the school system after COVID-19? How are we going to compensate for the time wasted? Some universities have been implementing online learning. Is it adequate? Not tax reviews,” said Mande.

More relevant, but ‘still complex’

Jolly Uzamukunda, commissioner for higher education at the Ugandan Ministry of Education and Sports, said the topic of tax reviews on institutions of higher learning was more relevant today because of COVID-19, but was “still complex”.

“It is a topic that needs time,” said Uzamukunda. “The private universities would have to specify to the ministry of finance the specific tax they would wish waived because you cannot waive all the taxes; even public universities pay some taxes – for example, when they are importing instructional materials or vehicles.”

“It is true private institutions offer a public service and a number of them are struggling because of this crisis, but so are many other organisations, not necessarily in the line of education. They also offer what we can call a public service … We cannot say that all of these organisations should be exempted from tax. Where will government get money to run the country?” she said.

However, Prof. Kateregga said it was necessary to look beyond revenue. “We are registered as private not-for-profit organisations. So, the money we make should be ploughed back into the institution. The money we pay as taxes can be reinvested into the universities, into research,” said Kateregga.

“The president [Museveni] understands us. But there are some elements who think we are making more money. What they don’t appreciate is that we also take loans and that we are employing many Ugandans. [These elements] need to come and audit our books,” said Kateregga.

Government support especially in form of tax exemptions

Ismael Mulindwa, director of basic education at the Ministry of Education and Sports and chairperson of the education COVID-19 taskforce, said government was discussing ways it can support the struggling institutions during COVID-19 but declined to divulge details.

“All I can tell you is that the taskforce is well aware of their [the institutions’] challenges; and is planning some contingencies,” said Mulindwa. “They are all our universities: private and public universities, and we have a plan for them.”

Private Universities tax exemptions

Kampala University

Mande said a number of private universities were overly reliant on student tuition fees to run their day-to-day business, which fuelled the problem – and they needed to prioritise alternative sources of funding moving forward.

“If we are to look at some lessons … from this crisis, it is that more than anything else they need alternative sources of funding and cannot continue to rely on student tuition fees entirely,” said Mande.

While Kateregga agreed with Mande’s suggestion calling on universities to prioritise alternative funding sources, he maintained that “favourable tax reviews” for the institutions would in the long run improve the quality of instruction and graduates in the country.

“Indeed, we [universities] need to look at innovation and research and alternative sources of funding. In any case, innovation and research are core roles of any university. But any tax exemption would also be welcome. We can reinvest this money in research,” said Kateregga.


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