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Bangladesh govt. recently passed a legislation for imposing 7.5% VAT on the tuition fees of the Private Universities in Bangladesh. Initially it was 10% and, according to the Finance Minister of Bangladesh Govt., it was reduced to 7.5% on request of the Prime Minister. There has been lots of debates on this VAT and most of the arguments were against the VAT on the tuition fees. Govt. imposed VAT on private universities tuition fees before but had to cancel the imposition due to severe student protest. However, this time govt. remains adamant on their decision. This even led  petition to Court of Law. However, nothing appears to influence govt. decision regarding this matter.

Today I stumbled upon a news from an online news portal of a national daily. Screen shot of the news is given below. You will find the URL of the news in the screenshot. In the news Finance Minister of Bangladesh Govt. will not reduce VAT on private universities tuition fees.  He didn’t even mentioned the cancellation of VAT in Tuition fee. The news also states that he doesn’t support the students who are protesting. Well, that is expected. He is the one who is behind imposition of VAT on education. We don’t expect him to oppose his decisions. But he should have considered that he is enhancing the cost of education and education is the basic right of every people of this country. This effectively means govt. is violating the basic right of its citizen.

Prothom Alo Online News (14-08-15)

The news reports that finance minister’s logic behind imposing VAT is “private university students should pay VAT on education because they pay higher tuition fee”. This is an absurd logic! He might have forgotten that we have a faulty education system that led to demand and emergence of private universities in Bangladesh. Private universities had demand because our public universities couldn’t accommodate all the students who pass colleges.

Every year millions of students pass the higher secondary exam. But only a thousands get the opportunity to get admission in public universities. Most of the student get admissions in National University or the private universities. Student looses 3 to 4 years of their life when they get admitted at National University due to session jam. And other public universities are full of political activities and violence. Under this circumstances public universities acts as blessing for the students whom govt. failed to provide higher education.

Govt. may argue that govt. universities has high standards on admission and those students have that standards. This will depict that standards in our primary and secondary education have are abnormally low. Govt. should set the standard high. Also Govt. has the obligation to make sure that those students who couldn’t get in to public universities continues getting higher education without the lose of 4/5 years of their life. Private universities are giving students continuing their higher education without loosing part of their life. But this opportunity comes with a high price. Except the reach students, most of the students’ family has to struggle and forgo lots of necessary expenses to provide adequate funding for the future of their children. Here govt. should subsidize the private university tuition fees too in order to ensure higher education of its citizen.

By charging VAT on education, Govt. have started a discrimination. They are providing tremendous subsidy for the students of the public universities and now they are charging taxes on their failure. By failure here I indicating that students have to pay tuition fees to private universities to continue their education which was supposed to be ensured by the state.

Those who supports VAT on Education often argues about the poor condition of the private universities. They also say that many private universities sell certificates instead of teaching. I agree with these scenarios. But that’s not the logic to impose VAT. Instead of imposing VAT, Govt. should be strict on those universities. Govt. may cancel the license of those universities and may even take over for the greater good of the country and its future generations. But imposing VAT on education should not even be the last thing.

Also by considering the economics terms, govt. should avoid imposing VAT on education. According to the economics theories, GDP of a country depends on the input resources which effectively means the labors and knowledge. Now, the knowledge is acquired through education. If VAT is imposed on education, acquiring knowledge will be difficult and input factors will decrease. Decrease in input resources will cause to decline in GDP and ultimately harm the country in the long run. Therefore, imposing VAT will harm the country in the long run. And if we follow the theories of Finance, an investor should choose long-term investment as payoff is higher in long-term asset. Here Govt. is the investor and payoff is the future of this country.

Personally I believe, There should not be any VAT not just on education but also on the medicines and daily necessary foods. Because these are the very basic need of a human being. We are already paying for these items. We should not pay any further for these items. It’s govt.’s duty to ensure the welfare of the people of this country. Instead of charging VAT on private university tuition fees, govt. should at provide subsidy at least 50% on these fees.

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