Education funded through taxation

8 05 2012



Free education is not always a good thing…


  • 1. Free education refers to education that is funded through taxation rather than tuition fees. Although primary school and other comprehensive or compulsory education is free in some countries, all education is mostly free in the Nordic and Scandinavian countries.
  • 2. In Norway and Finland, no fees apply for foreign students enrolling at a university, although they may not be eligible for a monthly study allowance and a loan. Finland taxes citizens at a marginal rate of 46.6%, reportedly the world’s fourth highest. Nevertheless, the nation’s economy is vigorous and unemployment as of mid-October 2011, was a relatively 6.8%. The Norwegian still have to paid far more taxes in Norway than they would have in America, even if they lived in a high-tax state like Massachusetts. As a Norwegian, they pays nearly 50 percent of their income to the federal government, along with a substantial additional tax that works out to roughly 1 percent of total net worth. Payroll taxes in Norway are double those in the U.S. sales taxes, at 25 percent, are roughly triple.
  • 3. Sweden until recently, provided free education to foreign students but changes have been introduced to charge fees to foreign students. Sweden top statutory income tax rate is 56.5% and top marginal all-in rate is 56.5%. Denmark also has universal free education, and provides a monthly allowance to students over 18 years of age. But Denmark latest top statutory income tax rate is 51.6% and top marginal all-in rate is 62.8%. Greece and Argentina provide free education at all levels, including college and university. What happened to Greece and Argentina economic crisis due to global recession; the crisis in Greece is still ongoing, as well as bankruptcy and chaos in Argentina over the last decade, can be regarded as a warning before we make any decision to implement policies of free education in Malaysia.
  • 4. In Brazil, free education is offered by the Ministry of Education. The Ministry offers scholarships for graduate degrees, masters, doctoral and post-doctoral for Brazilians and immigrants who have Brazilian citizenship. The best universities and research centers are public institutions, financed by either the local state or the federal government. However, when compared to the education policy of Brazil and Malaysia, the Malaysian Government education expenditures to the people is 8.1% higher than the 4.2% in Brazil. Based on World Development Indicators data, the Malaysian government has allocated expenditure, and subsidies for private education, including primary, secondary, and tertiary education is 20.3% of total revenue, which is 87% higher than the total Brazil expenditure in education.
  • 5. In Sri Lanka, free education is provided by the government at different levels. Government funded schools such as national schools, provincial schools and primary and secondary education is free, while assisted schools and semi-governmental schools provided the same at subsidized rates. At the university level, the state universities provide undergraduate courses free, however this totals only about 10% for those qualified for university entrance. Grants and scholarships are provided for a limited number as study allowances.
  • 6. Higher education was free in The UK until fees were introduced in 2001. Initially pegged at £1000 per year, the levels which institutions can charge has recently been raised to a maximum of £9,000 per year.
  • 7. Free education has several advantages. Everyone can attend, so the gap between rich and poor students decreases as poorer students have more opportunity. The economy also benefits from the increased pool of highly educated labor. An educated workforce attracts employers and foreign investment. Socially, a more educated population should have more choices regarding nutrition, jobs and lifestyle. An additional point is that university fees only contribute a small proportion of the university budget.
  • 8. However, some people are opposed to free education. Through their taxes, poor families subsidize rich students who can easily afford to pay fees. Spending government money on free education is often not possible or desirable when a country needs hospitals, roads, houses, military equipment’s, primary or secondary schools etc.
  • 9. A university education is a choice, not a requirement. People who finish college with advanced qualifications are going to earn large salaries and can easily afford to pay back loans. Furthermore, when people get something for free, they often do not value it. If college is free, many students will go there just because they cannot think of anything else to do.
  • 10. Free third level education is not always a good thing. Malaysian Government need to think carefully about their policies and ensure that they are using their resources to help all the people in the country equitably.