BHUWAN SHARMA
Private schools have been at loggerheads with the government over paying the five percent education service tax introduced this fiscal year. Only a negligible percentage of schools have paid the tax until now (the extended deadline for paying the tax was Jan. 9), prompting Finance Minister Dr Baburam Bhattarai to recently warn that students belonging to those schools which fail to pay the tax will be barred from sitting the School Leaving Certificate (SLC) examination. Little over a month left until the examinations, myrepublica.com caught up with the president of the National Private and Boarding Schools’ Organization of Nepal (N-PABSON), an umbrella organization of 1300 private schools, and principal of Galaxy Public High School Geeta Rana to discuss the topic.
Excerpts from the interview:
Has your school paid the education service tax?We have already paid income, remuneration, house and land tax. The students are yet to give us education service tax, hence we haven’t paid it.
You mean to say you will not be paying the tax from the existing fee structure, but will instead collect it from students?
The government has, themselves, given us a directive to add a five percent education service tax in the existing fee structure.
If that is the case, why are private schools not collecting the tax from students?
One, it’s because of the student unions. They have been strongly protesting the education service tax. We fear they might resort to violence if we go ahead and collect it. Also, parents’ unions have been against paying the tax. This is the existing situation, and we are in a quandary as to what should be our next move.
N-PABSON’s opinion is that students should, on the contrary, get concessions. Yes, this may not be possible because of the country’s economic condition. Hence, what we think is that if the government is not able to provide concessions, then at least don’t burden them with taxes.
The Finance Minister recently said that students of schools that do not pay the education service tax will not be allowed to appear for the upcoming SLC examination? What will you do if such a situation crops up?
First, such a statement is uncalled for. Students are the future. For the present, they cannot play with the future. Again, the statement from the Finance Minister is weird, considering that, besides secondary schools, there are colleges and universities in the private sector. The focus is just on school students because they know that they cannot protest. The onus is now on the parents. Being the prime stakeholder, they should come up with a solution or come forward and pay the tax.
Even if it were only an issue of private schools, remember that 20 to 25 percent of students appearing for this year’s SLC examination are from these schools; hence, this is not a small thing. It concerns a significant chunk of the public. Now, since this is a public issue, the government should have introduced the education service tax by first taking this group of people into confidence. Our role is limited to collecting tax and handing it over to the government. The problem is that those who have to pay don’t pay, while the government threatens us with stern action. Again, there are student unions that have warned us of dire consequences if we go ahead and collect the tax.
Have you discussed the issue with the parents?
Yes, a lot of times. A working committee was formed with the joint participation of N-PABSON and PABSON. We had stressed that parents should also be included in the working committee. However, the government did not include the concerned parents’ unions. Now, what is the use of a committee that does include the prime stakeholders? The group supposed to pay the tax is missing from the committee.
Are you working with PABSON to handle this issue?
Yes, we are not only working with PABSON but everyone else, including medical and engineering colleges. Also, when a few medical colleges tried to collect this tax, they had to face the ire of students. When some schools in Bhaktapur tried to collect this tax, parents knocked on the doors of the Supreme Court. It’s quite weird the government has imposed tax on a sector where its investment in zero.
So, right now, the situation is in a limbo and you are unable to do anything other than wait and watch?
The government is trying to instill fear by making statements, such as the one by the Finance Minister and by raiding schools. This is how they have been trying to come to a solution. However, our view is that all groups should sit together and come to a consensus.
Also, there are differing views coming from the government. The Education Ministry says the school has to pay a five percent tax on total turnover. The Internal Revenue Department says it has to be paid by the students. The Finance Minster says they are just asking for five percent of the profit.
You mean to say you are yet to get a directive from the government?
No, we received a directive which says the tax has to be paid by the students. But again, different bodies of the government have been issuing conflicting statements. This has led to a situation where the parents think that the schools have to pay the tax. Also, the directive says that students have to pay the tax. In that case, why should the parents come forward to pay it?
What is the solution to the problem?
The working committee had presented a report to the government with many solutions. One solution is to revert back to collecting a 26.5 percent income tax from schools, industries and businesses. The government had brought down income tax by 1.5 percent to 25 percent. What we are saying is that they can continue levying the additional 1.5 percent tax in the form of “Education Tax” from schools as well as businesses and industries. After all, even industries and businesses need skilled manpower.
