Taxing education may lead to institutes’ closures


The Association of Private Universities & Institutes (APUI) Wednesday demanded of the federal government to withdraw the proposed taxes in budget 2013-14 on education sector.

The demand was made at the Karachi Press Club by Prof Dr Abdul Wahab, President Muhammad Ali Jinnah University. He was flanked by Prof Dr Peerzada Qasim, Vice Chancellor Ziauddin University, and Kahlid Amin, Vice President of the APUI.

They academicians said the association met on June 12 to discuss the recent budgetary proposals impacting the education sector.

The proposals include among other things certain tax measures announced in the budget for universities, teachers and researchers which are as under: It has been proposed that advance tax be withdrawn at the rate of 5 percent on fee where it is above Rs 200,000 to be collected by educational institutions at the time of receipt of fee from the person paying the fee. This proposal will, in fact, lead to the immediate increase in the tuition fees of students in the private sector. It has been proposed in the budget that the tax rebate of 75 percent which was allowed for teachers, researchers and scholars be withdrawn.

This proposal will equally affect all the teachers of both public and private sector universities/institutes. It will increase the financial burden on teachers and it will also discourage research activities, demotivate and cause anxiety among the teachers.

As per the schedule of Income Tax Ordinance, any income of any university or other educational institutions which was not for the purpose of profit was exempted from taxation. This tax exemption for the universities/educational institutions which are not for profit has been proposed to be withdrawn thereby badly affecting their development projects. Some 5 percent tax has been levied on commercial and industrial electricity consumer for utilising above 1,000 units.

The above points will have the following widespread impact: Increase in students fees by 25 to 35 percent; brain drain of qualified teachers, researchers, professionals from Pakistan; reduced access to quality education in Pakistan; restricted growth of educational and research institutions

It is the constitutional responsibility of the state to provide education to its citizens. Private sector institutions of higher learning are, in fact, sharing this responsibility of the government by educating approximately one third of the total enrolment in higher education.

It is pertinent to note that private sector universities do not receive any grant from the federal or provincial governments. These universities are funding their operational and developmental expenses through their own resources.

The government needs to take necessary steps to encourage institutions to provide education to students which otherwise the government is bound to provide. The above proposals if implemented will make institutions financially un-viable and the sponsors will be compelled to scale down or ultimately close these institutions.

Private universities share responsibilities of the federal government by incurring significant investment and establishing high class institutions for advanced learning. The above proposals will severely affect financial viability of private sector universities. Hence, in the light of above discussion, it is requested that the government should consider withdrawal of the above-mentioned proposals.

The APUI also appealed to the prime minister and the federal minister to withdraw the taxes as they would generate only Rs 3 billion but will have a significant and detrimental impact on the middle and lower-middle class who will find it financially more difficult to educate their children.