Taxation to clean up school charges
By Zhu Zhe (China Daily)
Updated: 2006-02-06 06:19

A notice that schools are to be taxed on arbitrary fees collected from parents has aroused wide social debate over whether the policy will legitimize the fees once banned.

All government-licensed schools, from colleges and kindergartens, will have to start paying a 3 per cent business tax on any arbitrary fees, said a State Administration of Taxation notice two weeks ago.

Taxable fees include so-called "sponsorship" pre-enrolment fees that schools charge parents who choose schools or classes to allow their children a better education.

Fees for tuition, books, dormitories and food are exempt from the tax, but any amount more than the standard rate is also taxable, the notice said.

Some educators are questioning whether the move will turn schools into business enterprises.

Hong Chengwen, a professor with Beijing Normal University, said the policy, which is intended to restrict arbitrary fees, will not solve the problem but only give the "grey income" official credence.

"This may encourage schools to make more money from parents as they may shift the tax onto parents," he said. "How to make schools' grey income public is also a headache," Hong added.

Minister of Education Zhou Ji reiterated at a working conference at the end of last year that any arbitrary fees on compulsory education are strictly banned and would be the target of this year's inspections.

But a Beijing lawyer, Wang Xinquan, told China Daily that any taxable income in China is deemed as legitimate. "This is a conflict between policies of the tax and education departments," he said.

By press time, no official comments from the tax administration or the education ministry were available.

Sponsorship and pre-enrolment payments have long been a contentious issue as they bar students from poor families from entering good schools, thus creating inequality.

Despite being banned by educational authorities, payment of arbitrary fees is still widespread because of an imbalance of the allocation of educational resources between key and poor schools.

The payments, which can amount to 100,000 yuan (US$12,300) for each student, have left many families in debt.

However, some scholars also argue that the new policy is a compromise to reality.

As Huang Mengsheng, a professor working with Hohai University in Nanjing, wrote in an opinion piece, "since we cannot eradicate arbitrary fees, there's nothing wrong with regulating them through tax."

(China Daily 02/06/2006 page2)