State Minister for Finance MA Mannan yesterday explained the rationale for imposing taxes on education in the proposed FY2015-16 budget, a decision that has drawn strong criticism from some quarters.
The government proposes a 10% VAT on education in private universities and private medical and engineering colleges in fiscal year 2015-16.
“It is not a tax on education. It is a tax on certain kinds of educational services,” the junior minister told a post-budget discussion at the Metropolitan Chamber of Commerce and Industry (MCCI) in the capital.
“We have made a huge investment in education and we want to invest more. We have hospitals, but you do not like the beds. You go to a clinic where the charges are 10 times higher than ours [government hospitals]. You choose your lifestyle and you will have to pay taxes,” Mannan said.
Addressing the meeting, economist Ahsan H Mansur urged the government not to tax parents for access to education for their children.
“I do not like taxation of education through VAT. Health and education should be tax-free,” said Mansur, also the executive director of the Policy Research Institute.
“Private educational institutions take the pressure off public universities. We should not treat private education as a step-child. We should reconsider tax on all education as tax on education is not desirable,” he added.
Since the finance minister’s announcement, educationists and guardians have strongly opposed the government move, saying students have to bear the additional cost of education. Those who oppose the VAT say education is a fundamental right of every citizen according to the constitution.
In 2010, the government imposed a 4.5% VAT on private universities but backtracked and cancelled the decision a month later following massive protests by students in Dhaka.
Currently, around 450,000 students study at 85 private universities and 64 private medical colleges across the country.