National legislators discussed a draft law on the promotion of
non-state schools at the weekend but were divided on whether China
should allow non-state schools to make a profit while enjoying
preferential policies for public-welfare undertakings.
The draft legislation says that the owners of non-state schools
should be allowed to make a "reasonable return" and that non-state
schools should enjoy the same preferential policies regarding
taxation, financial loans, land purchases and school renovations as
schools funded by the government.
But the current Education Law, which took effect in 1995,
stipulates that no individuals or organizations are allowed to set
up educational institutions for the purpose of making a profit.
In
the second round of deliberations on the draft legislation,
legislator Wang Jialiu said: "Granting profits to owners of
non-state schools will encourage more investors to devote their
efforts to the cause of education and it responds to the real needs
of the current situation."
As
of the end of 2000, there were more than 60,000 non-state
educational institutions on the Chinese mainland, including 44,000
kindergartens, 4,300 primary schools, 7,316 ordinary high schools
and 999 vocational high schools, according to the National People's
Congress Education, Science, Culture and Health Committee.
This only accounts for 4.1 percent of schools of all kinds.
Wang qualified her remarks by saying that the law should prevent
the owners of non-state schools from making an exorbitant
profit.
Legislator Gu Songfen said that all educational institutions should
be regarded as public-welfare undertakings and so non-state schools
should be incorporated into the state educational system.
The draft law will make it more difficult to implement preferential
policies on education as it does not distinguish between
profit-making schools and those run for the public good, according
to sources with government departments including the Legislative
Affairs Office under the State Council, the Ministry of Finance and
the State Administration of Taxation.
Worldwide, schools for public welfare are registered as non-profit
institutions.
Their accounting systems are different from corporate accounting
systems; they enjoy taxation benefits, and can receive
donations.
But their investors cannot gain any cash return.
On
the contrary, profit-seeking educational institutions have to
register as corporations, exercise corporate accounting systems,
have no taxation benefits and cannot receive donations, said
sources with the State Council Development Research Center.
The government sources suggested that the draft law divide
non-state schools into profit-making and non-profit schools.
(China
Daily August 26, 2002)