A. Mannan :
The VAT means value added tax and ‘VET’ in Bangla Ò‡fUÓ means presents. The case in point here is that it is a ‘VET’ to the Hon’ble Finance Minister (FM) not for himself but for the treasury to supplement the budget short fall.
VAT is leviable on the amount added to the price of a commodity or service during production or distribution worked out through adjustment of vat incurred earlier.
Manufacturers / service providers collect vat from the customer on invoices or credits but pay the net vat after having adjusted of any vat paid earlier in the process. Thus, the ultimate customer/consumer bears the brunt of the whole gamut of vat who dose not have any recourse to recover any payment thereof.
To show the whole scenario in a nut shell the following may be mootable:
1) VAT is payable by the ultimate customer/consumer who has no recourse to recovery even a morsel of it
2) VAT is not on the cost of goods/service sold or provided but on the price i.e. value i.e. leviable only from the ultimate customer.
3) The sales price before vat is computed includes, inter alia, profit margin or the loss if any.
4) Product/service has to be identifiable and tangible, saleable in the market at a price within a reasonable spell of time frame. wheaas education service has no short term or time saleability. A student obtains education / training and his price/value is not computable until completion of his studies i.e. no short term computability for evolution of a price. Moreover, evaluation of students of same class will vary to a wide degree. Unless evaluation is done, one can not put a price tag.
5) Vat to be levied on education is unconstitutional under Article 15(2) of our Constitution (Fundamental Principles)
6) (a) Should Vat be leviable in case of Private Varsities, it will wide open a debate on discrimination amongst the students of Private Varsities, Colleges, schools, KG schools, English and Bengali media.
(b) It will also open a floodgate of debates and finally lead to Pandora’s box highlighting the Aricle 27 of the Constitution on the issue of equality before Law.
7) As enshrined the Private Varsities are run by a Board of Trustees. ‘No profit’ incurs no tax (except a meagre 15% on the surplus). Moreover, accounts of such organizations are presented as income and expenditure accounts and shown surplus / deficit thereof.
The surplus is to be used for research and development and may be on students welfare (like that of CSR) whereas deficit needs to be met up to through donations/loans. One may question here that now- a- days many such varsities mis-use direct the surplus funds, inter alia, to the benefit of the Trustees.
This has to be throated by any means and pecuniary as well as other type of punishment need to be imposed and vigorous monitoring has to be organised.
8) Age old tradition: During the student life parents and close relatives take care of the needs of a student, say on festival days, present him with cash and/or gifts. Our FM must be remembering his young days. How come he has, over the years of age, forgotten all those good things and he does not want to spare the students and ask them to pay vat contrarily !
9) For both sides of the divide ‘Gandhism’ is urged upon. The students have been, my reckoning of the issue, showing tolerance, the Govt. must reciprocate immediately and urgently . Let us do it now i.e. withdraw the Vat like a fast track service, for every one knows by now asking such Vat is illogical, illegal, unconstitutional and immoral as well.
10) I know, Dear FM, you have the sustainable habit of telling the truth. May be this time you have told the half truth, like firstly, imposition of Vat then secondly, not on the students but on the Varsities, thereafter thirdly, first year on the Varsities and thereafter on the students and finally i.e. fourthly indicative approach for a negotiated settlement. Procrastination is the thief of time, please withdraw it now. It is now open secret that when you realized the second initiative as above i.e. Varsities would bear the vat it would go against the concept of vat, you had been pretty quick to utter the ‘thirdly’ step as above.
Finally you tend, I am glad, to be on the verge of buckling. Yes, nothing wrong if you do buckle to a genuine cause and demand of the students against a repressive tax, -sooner the better.
(Abdul Mannan is Former State Minister, Ministry of Civil Aviation & Tourism and Textiles and Former President, South Asian Federation of Accountants (SAFA) E-mail : [email protected], mmfedamm @gmail.com)
(PS: This article was written on 13/09/15 and 14/09/15 morning it was sent to the press media for publication. Meanwhile the Govt. has withdrawn the VAT. Everybody in the process of demand and withdrawal deserves congratulations. Author)
