Higher Education Is Too Important to Harm with Tax

Rob Wonderling, Rev. Peter M. Donohue and Daniel K. Fitzpatrick take a closer look at the effects of taxing higher education in this Op-Ed recently published by the Philadelphia Business Journal.

Local municipalities and state governments looking for new revenue sources recently have focused on institutions of higher education and their students as untapped wellsprings of funds. Pittsburgh’s mayor briefly considered a tuition tax. In Harrisburg, legislative proposals would allow municipalities to impose an essential services fee on colleges and universities.

We believe such efforts are seriously misguided. They fail to acknowledge the significant contributions to the region’s economy generated by this sector. And they fail to address the potential risk to our future prosperity.

Greater Philadelphia’s higher education sector is a major employer and purchaser of goods and services. It produces tomorrow’s innovative companies and supplies tomorrow’s talented work force.

Our 92 institutions of higher education directly provide more than 85,000 jobs, with employees paid a total of $5.2 billion in wages, according to a 2007 report by Select Greater Philadelphia. Total student spending, excluding tuition payments, is about $2.2 billion, equivalent to just over $8,000 per FTE student per academic year. And these institutions purchase $7.1 billion in goods and services.

This sector already generates substantial state and local tax revenues in the form of personal income tax and earned income tax, as well as sales tax, and corporate income tax.

Higher education is essential to the economic health of the region, accounting for as much as 6 .9 percent of its economic activity, including spending by visitors and capital construction projects.

Colleges and universities also contribute to our quality of life, presenting lectures, exhibits and plays. Some provide police protection beyond campus borders. Students and faculty volunteer their time and talent to community organizations.

There is no denying that higher education is expensive. Adding a tuition tax or an essential services fee may be the final straw that forces a student to go elsewhere or quit educational pursuits altogether. As a region, we can’t afford that.

We recognize that municipalities need to solve serious economic issues. However, we should look to our higher education community to produce more employees, more businesses, and more development that will ultimately increase tax revenue.

Making access to higher education more expensive is not the solution. It will drive away students and erode the many benefits that colleges and universities provide. We urge lawmakers not to offload today’s budget problems on our most precious asset — the skilled work force of tomorrow.

Rob Wonderling is president and CEO, Greater Philadelphia Chamber of Commerce (GPCC) and chairman of the CEO of the Council for Growth. Rev. Peter M. Donohue, OSA, is president of Villanova University and chair of the GPCC Regional Colleges and Universities Presidents’ Council. Daniel K. Fitzpatrick is president and CEO of Citizens Bank-Eastern PA / NJ / DE, and 2010-11 chair of the CEO Council for Growth, Human Capital Working Group.