Education Minister Batt O'Keeffe: examining axing of college fees

Reform of the tax covenanting system introduced in the mid 1990s to coincide with the abolition of undergraduate fees at third level has brought about tens of millions of euro in savings for the government in the intervening years, new figures have revealed.


However, while the savings achieved by reform of the system would "help" with the introduction of free third-level fees, a spokeswoman for the Department of Finance has confirmed that they were not "ringfenced" for this purpose.


As a result, she was unable to say how much of the money saved was specifically used to finance the abolition of free fees.


As the Minister for Education Batt O'Keeffe continues to examine the possibility of reintroducing third-level fees here, the figures show that the estimated cost of tax relief under the covenanting system stood at €58.3m in 1994/'95.


But by 1996/'97, when reform of the covenanting system had been fully introduced, this figure had dropped to just €8.4m.


This represents an annual saving of approximately €50m, a level of savings which continued over the next two years before the cost of the covenanting scheme rose slightly to €10m in 1999/2000.


Since then, the cost of the scheme has ranged from €11.2m to a peak of €18.9m in 2005, figures which are still significantly below the 1994/'95 levels.


The figures were released in a parliamentary question to Labour party TD Joanna Tuffy.


Ms Tuffy told the Sunday Tribune that the new figures illustrate that the government has had significant funding available to help support the abolition of free fees.


"Basically there was a funding stream set up at the time of the abolition of fees, through reform of the covenanting system," she said. "The aim of this was that it would even out the extra expense to the exchequer."


"This is something that the public should be reminded of…. The state didn't just take on this extra expense. It did identify this source of funding – and that source is still there."