No VAT On Education

A debate resurfaces on horizon,
Causing widespread anger, I reckon.
VAT on higher education
Could dwarf the progress of nation.

A debate resurfaces over media about government's contemplation of imposing 15% VAT on private universities.¹ The decision was greeted with strong opposition as it might raise the cost of availing education. Government had earlier made similar move. But stay order from High Court put the matter on hold. To many, taxing education turned out to be unethical. Revenue government anticipates to receive from VAT is very negligible. So revoking of the decision gathers lot of support.

Tribal politics at public universities crippled the learning environment there. Every year, between the end of college exam and the beginning of university admission test, people see gruesome stories of rival / factional clashes at public universities. One or two snaps prompt parents to change their minds about getting their children admitted into a public university, which offers subsidized education. The idea of private university was conceived to retain a section of students at home who were poised to study abroad. Interest groups of all hues stepped forward to set up private universities. Mushrooming did a tremendous damage to the objectives conceived earlier. However,few stood alone by churning out quality graduates who outshined and outdid others in their respective workplaces. So banal statement like private universities do not live up to their utility may not suit them.

But these universities are very expensive for a typical Bangladeshi household.Many trustee board members made them another mean to make money.Moreover, many politically backed quarter also jumped into this business. In this pell-mell, objectives and images of private universities began swerving.

Among the 97 universities in 2017, only 6 had more than 10,000 students.² Only hand few are capable of delivering the quality education. Households here save their money like ants. Spending on education is like an investment to them. They just want to make sure their sons and daughters get the best at the expense of their hard-earned money. Many universities have strong ties with some thriving sectors.Many graduates land in dream jobs after graduation.

Exorbitant and unregulated fees make heavy dents in parents' pockets. University authorities, unlike public ones, do not allow any peaceful protest and stifle any attempt to challenge policy decision regarding operation of universities. So, when the first attempt to impose 15% VAT on private university was made in 2016, there was spontaneous outbursts from the students who knew surely authorities would pass it on them.

Before that movement, many lower middle-class and well-to-do families from villages and mofussils had begun sending their children to private universities, scattered mostly across outskirts of Dhaka and adjacent districts.

And these students started to live in shared accommodation of Dhaka's narrow and cramped apartments. Cost of living in Dhaka and exorbitant fees left little room and pushed them to street movement. "No VAT On Education" was literally on every car and wall and their continuous sit-ins proved wrong others who thought they were not capable of launching such movement of their one.³ It was a successful one and managed to get a stay order from the High Court. The movement was appreciated by all the quarters. Even the government felt a bit unsettled. The idea of introducing student politics at the private universities was floated. But it was not gained much support across the political corridor and later scuttled.

It is not clear what the government will do with this meagre 15% VAT on private universities. It has no plan to divert the money for the benefits of private university students. For instance, government does not offer any facilities to them. If government offers education voucher, financed by this VAT money, they could easily meet part of their expenditures and payback the money when they enter job market. Or the money can be invested to build dormitories across Dhaka and adjacent areas for private university students. But government remained mum about its objectives.

The decision coincided with ordeals unleashed by COVID-19 to middle-class lives. Many are coping with it and finding it very hard to keep the rhythm of expenses they had prior to the onset of this pandemic. At this difficult time, they need fresh pledges of support---monetary or in other form. Another cost increasing item is least expected. Furthermore, many universities put up additional charges for offering online courses. The students need some policy support that eases their cost burden.

During the pandemic, a huge number of students have been auto-promoted. This sheer number will definitely put pressure on higher education institutions. Many will enroll with private universities. Corona has already squeezed savings of the middle-class. Rethinking of 15% VAT will add further woes.

Let's recourse to John Stuart Mill. He wrote:" The worth of a state ,in the long run, is the worth of individuals composing it; and the state which postpones the interest of their mental expansion and elevation to a little more administrative skill,or of that semblance of it which practice gives in details of business; a state which dwarfs its men, in order that they may be more docile instruments in its hands even for beneficial purposes --- will find that with small men no great thing can really be accomplished; and that the perfection of machinery to which it sacrificed everything will in the end avail it nothing, for want of the vital power which, in order that machine might work more smoothly, it has preferred to banish."⁴

If government really intends to earn revenue from private universities, then it should impose additional taxes on businesses operated by some trustee board members. Specially the ones who take regular benefits from universities. In the wake of corporate tax ease, these members can afford paying extra money while the COVID crisis beaten parents cannot.

----------------------------------------------- Notes And References:

1. "Uccha Shikkhar Upor Kor Adalater Nirdesher Poriponthi( VAT On Higher Education Is A Violation Of Court Order)", a report by Bangla Tribune, June 08, 2021. Link here

2.BBS Pocket Book 2018.

3. Don't Tax The Future, a piece I wrote back in June 06, 2021, in the wake of 15% VAT on English medium school.Link here

3. On Liberty, John Stuart Mill.