Evaluate The Fiscal Implications Of Providing Free Higher Education Case Study

INTRODUCTION
The aim of this assignment is to analyse the fiscal implications of providing free higher education in South Africa, considering the current economic environment of slow economic growth, high public debt, and an increasing budget deficit. An analysis of the conceptualisation of higher education as a public good shall be provided as well as a brief discussion on the possible effect of providing free high education on the government expenditure, government revenue (tax) and government debts. The feasibility of providing free education in South Africa will also be assessed, in a form of a comparison between South Africa and another country with a policy of free higher education, in the context of fiscal policy. After all the findings
Education as a merit good
According to Black et al. (2015:48) education is an example of a merit good and the reason for treating it as a merit good (service) is because the individuals who receives them often confers certain external benefits on other people and hence on the broader community. The market undersupplies merit goods.
Whilst Le Roux et al. (2006:144) states that merit goods are goods that society considers to be good, since an increase in their use increases the welfare of the nation. He states that the under provision of merit goods is because the market only takes the private benefits and not the social benefit into account, and that if the provision education was left to the market there would have been only privates schools and most people would not have had access to affordable education.
Parents may be unaware of the longer-term benefits that their children might derive from education. Education is a long-term investment decision. The private costs must be paid now but the private benefits (including higher earnings potential over one's working life) take time to happen. The external benefits that are provided by education includes rising incomes and productivity for current and future generations and an increase in occupational mobility to help to reduce
Other external benefits might include the encouragement of a more enlightened and cultured society. Providing that the education system provides a sufficiently good education across all regions and sections of society, increased education and training spending should also open up more equality of opportunity (Arnold, 2014:17).
The reasons why the government should provide merit goods
Abelson (2003:22-23) states that government uses of taxation, subsidies and legislation to control merit goods. In the case of merit goods where a higher consumption of the good is regarded as good for society, the government makes use of subsidies. This is why government subsidises the arts and cultural events and the distribution of condoms.
To encourage consumption so that positive externalities of merit goods can be achieved for example free vaccination against infectious diseases. To overcome the information failures linked to merit goods. On grounds of equity – because the government believes that consumption should not be based solely on the grounds of ability to pay for a good or