Demonstrations turned into celebrations yesterday following the withdrawal of an unpopular VAT on private university education, ending nearly a week of sit-ins that ground traffic to a halt in the capital and averting potential clashes between law enforcers and students.
The decision came following a directive from the prime minister that the tax be withdrawn.
In a U-turn on the contentious issue, the Awami League-led government appeared to back down in the face of public disapproval, but won tremendous support in the process.
Protesting students withdrew their blockades and began joyful rallies after receiving news that the government had withdrawn the VAT.
The decision to withdraw the VAT was announced yesterday in a press release signed by Finance Ministry Senior Information Officer Shahedur Rahman.
The press release reads: “The government does not want to create any interruption at educational institutions and suffering in public life. Considering the issue, the government has decided to withdraw the 7.5% VAT imposed on private universities, and private medical and engineering colleges.
“The government hopes students and teachers of private education institutions will discontinue their street agitation and return to class. The government hopes they will not do anything that could create obstacles for the development of the country.”
In a press briefing around 3:45pm yesterday, National Board of Revenue Chairman (NBR) Nojibur Rahman also announced that the 7.5% VAT on private university tuition fees had been withdrawn.
A special order signed by NBR Chairman Nojibur Rahman said the NBR, under section of 14 of the Value Added Tax Act, 1991, withdrew the VAT on private university, private medical and engineering colleges.
“It will be considered that this order was executed from June 4, 2015,” the order read.
The order said that since private university, National Board of Revenue Chairman (NBR) Nojibur Rahman also announced that the 7.5% VAT on private university tuition fees had been withdrawn.
A special order signed by NBR Chairman Nojibur Rahman said the NBR, under section of 14 of the Value Added Tax Act, 1991, withdrew the VAT on private university, private medical and engineering colleges.
“It will be considered that this order was executed from June 4, 2015,” the order read.
The order said that since private university, medical and engineering college education is expensive, imposing a VAT will increase students’ education costs.
Earlier in the morning, Bangladesh Chhatra League, the student wing of the ruling Awami League, called upon the prime minister to withdraw the VAT.
Finance Minister AMA Muhith on Sunday said the government had not closed the door to discussion on the VAT issue.
“I am not rigid about the National Board of Revenue’s decision to impose VAT on tuition fees of private universities,” he said. Muhith said he had not been rigid on any matter during the six years he has served as finance minister.
The taxman’s take on the issue
In the wake of widespread criticism for proposing the VAT, the National Board of Revenue (NBR) on Sunday night sent a report on the VAT on private university tuition fees to Finance Minister AMA Muhith.
The report contains information on various countries that charge VAT on private education and estimates the amount of revenue that would be realised by imposing a VAT on private university education here.
The NBR report also laid out legal arguments for making universities liable to paying VAT, sources said. NBR officials said in many countries private education is not outside of the VAT net.
VAT is imposed on private university education in England according to a certain criteria. There is a 15% VAT on private education in New Zealand and a 7% VAT on it in Singapore, NBR officials said.
According to the National Board of Revenue, the government would have collected Tk150 crore by imposing a 7.5% VAT in FY2015-16.
The tax on private schooling would have cost an additional Tk1,500 per course per semester, according to a private university student.
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In its report to the finance minister, the NBR also provided details of several dozen private universities’ income tax files for the last decade and a half.
The NBR reported that private universities paid insignificant amounts of income tax compared with profits made from tuition fees and other charges.
The report contained information about income tax paid by 66 of 83 private universities in the country.
According to the report, the NBR estimated that the private universities should have paid Tk123.47 crore in income tax between FY1998-99 and September 12, 2015 on the basis of their stated income.
But they have paid only Tk47.78 crore in income tax during the period, while the rest of the amount remains pending as 25 universities have taken the matter to the High Court.
NBR field offices are now collecting more data to dig deeper into the issue, officials said.
Punchy cops and street smarts
The recent spike in street agitation against the VAT on private university education began on September 9 when a group of East West University students took to the streets in Rampura, clashing with police who fired rubber bullets at the students.
Nearly 30 students were injured in the clash in which law enforcers charged batons and opened fire on the students.
By the next day, the student movement had spread like wildfire across the city and elsewhere in the country.
Private university students staged protests at key intersections of the city demanding the withdrawal of the VAT, choking off traffic and leaving the capital in severe gridlock.
Dhaka students were joined by their colleagues in Sylhet, Chittagong and Rajshahi following the police action against private university students on September 9.
The rallies and blockades were largely peaceful, except for one incident on September 10 in which a group of unidentified assailants scuffled with protesters on the corner of Dhanmondi’s Road 27 and Sat Masjid Road at the end of the day. Shortly afterward, one student was clubbed on the head by a policeman while he was speaking to the media. He was sent to a nearby hospital in a rickshaw.
Water-cannon were deployed around the capital and police in riot gear, armed with batons, shields and shotguns were seen in force at major intersections of the capital early yesterday morning.
But the tense mood of the morning soon gave way to cheers of jubilation following the government’s withdrawal of the VAT.
“We are very happy now, because our demand has been fulfilled. Thanks to the government for withdrawing the VAT,” said Ahmed Jubayer, a Law student at Uttara University.
“It is our right to have a tax-free education … this victory restores our right to an education that is not taxed like a commodity, but is treated as a human right,” he added.
