‘Ringfence corporate tax rather than hike PRSI to boost third-level funds’

Employers and unions agree that ringfencing a portion of corporate tax or business profits could be a better way to bolster higher education funding than a government proposal to increase employers’ PRSI.

The increased contribution has been suggested by Education Minister Richard Bruton and Public Expenditure Minister Paschal Donohoe through a proposed increase in the National Training Fund (NTF) levy.

A portion of employers’ PRSI, currently 0.7% of each employees’ pay, is currently ringfenced for the NTF. But the ministers claim that raising this over three years to 1% could bring in close to €200m more a year for higher and further education.

Consultation on the proposal continued behind closed doors when some of the 28 organisations that made submissions met yesterday to thrash out their views.

The idea of an increased employer contribution towards the operation of higher education was put forward in last year’s report on increasing funding to the sector from an expert group chaired by Peter Cassells.

But adult learners’ organisation Aontas has told the Department of Education that any funds raised by an increased NTF levy would not address the separate need for more investment in further education, stressing that the Cassells report talked only about raising increased funds from employers for higher education.

The report flagged the need to increase third-level college budgets by €600m over their 2015 levels by 2021.

But many submissions, including that of state agency Enterprise Ireland, said a higher NTF levy might be seen as simply an increased tax with little return.

Employers’ organisation Ibec does not oppose using more funding from business to help solve the funding crisis, but it describes the NTF as “little more than an earmarked tax.”

It says ringfencing a portion of corporate tax gains for investment in higher education would deliver the same result more effectively.

“Given the scale of corporate tax receipts, this is a more viable and sustainable employer investment mechanism,” Ibec’s submission said.

While this would effectively mean a significant increase in direct funding from the exchequer, the Government has only committed to providing an extra €160m in total over the next three years for higher education.

The Irish Congress of Trade Unions, although it does agree with an increased NTF levy, also argued that the extra benefits of increased skills to larger enterprises should be reflected in how the burden is shared. It said this creates a valid argument that some or all of the cost should come from employers’ profits reflected in corporation tax, either by levy or a ringfenced fund.

“This would achieve a fairer sharing of the burden between large and small employers and between indigenous companies and SMEs,” it said.

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