In the wake of widespread protests bringing traffic to a standstill in the capital this Thursday, the government has announced that the VAT imposed on tuition fees for private universities shall be paid by the universities and not their students, and private universities will not be able to raise their fees on this excuse.
But this raises more questions than it answers. First, this may lead one to assume that the government can restrain private universities from raising their fees, though actually, there is no such authority under the law. Secondly, VAT is not a tax on income. It is a tax on the value received by the purchaser of a good or recipient of a service.
The law allows for the National Board of Revenue to determine the person from whom VAT is recovered by the exchequer. It may be recovered from the person who sells the good or provides the service, or it may be deducted at source by the payer, depending upon what is being sold or provided.
In case of private universities, the NBR has provided that VAT shall be recovered from the university. But the tax still remains a levy on the fee paid for the service received by the student from the university. Seen as such, the explanation proffered seems lame at best, intentionally disingenuous at worst.
Predictably, social media is awash with commentary on the issue, mostly critical of the government. There are some, however, who defend the government, pointing to the huge “profits” expensive private universities make, and also assuming that the families of the students of private universities can afford to pay the VAT.
Those defending the government ignore that private universities cannot lawfully make “profits.” Indeed, they do not have “owners.” Under the law, they are supposed to be philanthropic endeavours, run by boards of trustees. Surplus income is not supposed to be distributed as profit to owners, but invested for the purposes of the university.
Unfortunately, the fees charged by the private universities in Bangladesh are exorbitant, and there are widespread reports of abuse by the trustees in a great many of them, where secret profits are made in a myriad of ways, mostly through defalcation and diversion of funds in the course of procurement and investment.
Indeed, there are disturbing reports of “sale” and “takeover” of private universities by business houses, where the outgoing trustees receive a “consideration price” from those who supplant them. If these are indeed philanthropic endeavors, this should never happen.
This, perhaps, should be the real issue here. The powers of oversight of the University Grant Commission should be reviewed and made more effective. Rules should be made and strengthened to audit private universities and make procurement transparent. Surplus income should be invested along principles governing employee provident funds, so that income can be used to fund expansion, research, and student aid in the best traditions of endowment-rich universities of the West. The trustees of the private universities must be held to account to the trust reposed in them.
But as far as subjecting the tuition fees to VAT is concerned, in the absence of there being any legal control on the fees, one fears that even if it is made out to be an imposition on the private university, and not the student, in the end it would be used as a pretense to increase fees. While the imposition of VAT may well be within the letter of the law, it is a poor policy decision.
The total number of students in private universities has outnumbered those in public universities since 2012. Not all students in private universities are rich. Indeed, most are from middle and lower income groups whose families endure a great deal of sacrifice. The incidence of VAT will ultimately be passed on to them.
While the students of public universities enjoy the benefits of government subsidies, those in private universities are being saddled with an even bigger burden. This is clearly discriminatory. One must remember, unlike income tax, which is progressive, VAT is a regressive tax imposed on consumption. The poorer a person is, the greater the incidence of the consumption, and therefore the tax, as a proportion of his total earnings in a given period.
Under our constitution, education is not a fundamental right. But one should not lose sight that under the fundamental principles of state policy enshrined in the constitution, the state is supposed to ensure universal and free education. In this sense, the existence of private universities acknowledges the continuing failure of the state to attain this. This in itself can be excused, since in terms of economic development, we are not there where we can have a welfare state.
But having thus failed, is not the state rubbing salt into a wound when it makes education in a private university even more expensive? Even if the fundamental principles of state policy are legally unenforceable, are they not supposed to be a beacon that guides the government?
Indeed, these principles have a sanctity which is beyond the law. They are the embodiment of the spirit of 1971. They represent the true ideals that the Bengali nation fought for, and is still striving to attain. They ought to be the true stuff of Shahbagh.
Seen as such, is not the government being terribly wrong here? Is the unpopularity that it is garnering worth the value? Should not the party which led us in our glorious deliverance imbibed in that spirit take a second look?
