Taxing matters
If anyone thinks that the NBR’s recent imposition of 7.5% VAT on private university tuition under the new budget is going to make life harder, you clearly haven’t thought of all the good that extra tax revenue will bring. Yes, your father may have to sell his last pair of pants and wear a newspaper around his waist with a paper clip, but imagine all the public benefits you will receive.
For example, the government will create more roads and flyovers. The infrastructure will need maintenance via sweepers and washers, which incidentally might be the only jobs that you will be qualified for after that 7.5% in tuition forces you to drop out of university.
Clearly, this is a well thought out long term strategy to stimulate the economy. Not convinced yet? Yeah, neither am I.
Usually when an administration decides on taxing a particular demography, it has a larger social objective than only increasing tax revenue. What possibly is the social benefit of taxing students their tuition for a college degree? A degree is absolutely necessary if one wants to earn a decent wage. Clearly, our government has been struggling to broaden its revenue stream from income tax. But to tax private university students exclusively, especially in a country where there is an alarming shortage of seats in public universities, is unfair to our middle and lower-middle income families. Dhaka University enrolls only around 4500 students annually, yet so any more high school graduates apply. The stringent acceptance rates remain similar in the districts as well. This forces parents to consider doling out their hard-earned savings to get their children higher education through private institutions.
Let us look at the math. Taking North South University for example, every semester, a newly enrolled student must take 3-4 courses which cost 16500 taka each. To graduate within 4 years, most students take 4 courses which amount to 66000 taka. With the additional 7.5% tax, the amount increases to 70950 taka per semester. Not to mention the library, laboratory and other ancillary fees included.
And that is just tuition.
Taking an average of tuition in private institutions, annually it costs 1.33 lakh to study Computer Science Engineering, 1.60 lakh for Electrical and Electronic Engineering, 1.42 lakh for Pharmacy, and 1.31 lakh for Bachelors in Business Administration respectively. With the added tax, the cost will rise by at least 10000 per year. For a lower income family, this sum of money is substantial.
Don’t blame your parents if they are suspiciously pushing you towards carpentry or refrigerator repair. Vocational training might just become the new BBA degree.
There are 4.5 lakh private university students in the country. That is a lot of future workers. Our country would benefit greatly from a well-educated and effectively trained workforce. In fact, since our public universities have very limited enrollment, the private university students will play a significant role in our economy 10 years down the line. They are the future. Unless of course the tuition is too much to bear, in that case there is always that old SINGER sewing machine at home to fall back upon. Instead, if the government decided to spend on education, it will be a promising investment.
Caution, the following information may make you want to marry into a Scandinavian family. Denmark actually pays its college students an average of 5839 Danish Kronas a month. That converts to approximately 52,000 taka. You may wonder if that hurts their economy since paying jobless college students must empty their coffers. Quite the contrary as the evidence suggests, Denmark’s youth unemployment rate is one of the lowest in Europe at 11 percent. Now, I am not suggesting that we pay every person with a high school degree an allowance that surpasses the wage of most government officials in Bangladesh, but there is a correlation that suggests that a greater investment in education has higher returns for the economy. Investing in our students would help them reach their true academic (among other) potential, while this VAT on tuition does the opposite, it promotes inequality.
A high income household can afford the extra VAT on tuition, but a low income family – one that is already straining to pay the existing tuition – may have to pull their kid out of college. This policy will potentially shatter the dreams of many low income students that may go on to do great things, equipped with the knowledge and skills that a good education provides. The taxation on education drives a dagger through meritocracy and increases the gap of inequality. A report from the Organization for Economic Co-operation and Development released last December concluded that inequality and a lack of access to education slowed down economic growth in most developed countries from 1990 to 2010.
To the students who will have to drop out of their respective universities if this VAT is enforced, know that this is exploitation, know that you are being discriminated against, there cannot be separate rules for public and private universities.
But, there is still a fighting chance.
Thanks to the petition filed by Daffodil University teacher Khandaker Didar Us Salam, and two students named Arif Mahmud and Farhad Hussain, the High Court issued a rule to the NBR to explain its decision on the education tax, to be delivered within 3 weeks from August 9. This decision can be repealed if the government cannot produce reasonable cause for its budget decision, and this is where the students’ voices must be considered. No matter how the authorities try to justify this law, no reason shown by them can trump the need for affordable higher education for students.
Ref: IndependentTV24 YouTube channel.
https://www.washingtonpost.com/news/
worldviews/wp/2015/02/04/why-danish-students-are-paid-to-go-to-college/
http://www.oecd.org/social/Focus-Inequality-and-Growth-2014.pdf
Rasim Alam needs a blurb that's funny, charming, and subtly hints at his misunderstood artistic side. Send him suggestions at [email protected]
Comments