The government has been urged not to impose extra financial burden on the private universities in the form of VAT as it runs counter to its goal to develop human resources.
Academics, parents and students say it will only mount pressure on the middle-income families already under stress to meet the high expenses at private universities.
In his budget speech in parliament earlier this month, Finance Minister AMA Muhith said that one of his focuses was to develop human resources, but imposing an indirect tax on the students’ fees stands in contradiction to that vow.
Limited number of seats, session jam and political unrest at the public universities – perceived as provider of better education than private institutions – have all contributed to the rise of private universities over the last two and half decades.
In June 2010, the National Board of Revenue (NBR) proposed to impose 4.5% value added tax (VAT) on the private university tuition fees. However, in the face of street protests from students directly affected by that, the revenue authority decided to stall the decision at that time.
Five years later, on June 4 this year, the government again proposed to impose VAT on the education at private universities and medical and engineering colleges for the fiscal year 2015-16. Only the rate this time was increased to 10%.
Itminan Tasneea, a second semester student of architecture at Brac University, recently told the Dhaka Tribune: “As I am studying the second most expensive subject in the country, a 10% increase in tuition fees will double the expenditure. I need to spend a large amount of money for in arranging class projects.”
The common perception is that all private university students come from affluent families, said Maisha Maliha Yusuf, a student of economics at the same university.
“But the truth is that many of us come from limited-income middle-class families. Everyone cannot secure a berth in the public universities. But higher education cannot be compensated. So, our parents cut many other expenses for bearing the costs of our study,” she said.
Sabbir Ahmed, a student of MBA at the North South University, expects the government should subsidise education instead of imposing taxes.
“Over the last 10 years, the private university have been producing excellent graduates who are making great contribution to the society. All students should be treated equally no matter where they are from,” Sabbir said.
Parents think that some of the private universities charge the students high enough in tuition fees to be able to carry out the VAT rather than taking it from the students.
Captain SMH Kabir, father of an NSU student, said: “If the government is imposing tax on universities then why are they charging the students? NSU is one of the most expensive private universities in the country and they have enough money to pay the tax. Imposing the VAT on the students will be unfair.”
While talking to the Dhaka Tribune, Brac University Vice-Chancellor Prof Syed S Andaleeb said: “It is now a concern for students, parents and the authorities. It will be a burden for the students if they have to pay the VAT and also a fall back for the universities because the enrollment of students would go down. The issue has been raised and will be conveyed to the government and hopefully there will be a calm negotiation.”
Prof M Omar Rahman, VC of the Independent University of Bangladesh (IUB), said: “There is no difference between demographic profiles of public and private universities. As much as 65% students are enrolled in private universities. IUB gives 100% scholarship to the students with the best results. Other meritorious students also receive different benefits from the university.”
Mohammed Farashuddin, former central bank governor and now the chairman of the board of trustees of the East West University, said: “We are trying to build a knowledge-based society and tertiary education is essential for building efficient human resource. By law, private universities are not-for-profit organisations. So the argument behind imposing VAT is very weak as tax is imposed on commercial institutions or profit-making entities.”
During a post-budget discussion in Dhaka recently, State Minister for Finance MA Mannan said that the proposed VAT is not a tax on education, it is a tax on certain kinds of educational services.
“We have made a massive investments 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,” the junior minister explained.
Abdul Mannan, the new chairman of the University Grants Commission (UGC), refused to talk about the matter when contacted.
At present, around 450,000 students study at the 85 private universities and 64 private medical colleges across the country.