The Power of Protest
- Sales Tax News
- Sep 17, 2015 | Gail Cole
Students in Bangladesh brought the capital city Dhaka to a standstill last week as they protested the imposition of value added tax (VAT) on private university tuition fees. Similar protests wreaked similar havoc in a number of other large cities, including Chittagong and Sylhet.
The protests were sparked by a tax that took effect on June 4, 2015. Nestled in the new budget, between supplementary 20% duties on the domestic production of cigarette paper and ceramic bathtub, Jacuzzi and shower trays, is this small paragraph:
“Although VAT at a truncated rate of 7.5 percent is currently levied on English Medium School; the Private Universities, Private Medical Colleges and Private Engineering Colleges are still beyond the boundary of the VAT net. I hereby propose to bring these sectors under VAT net as well. However, in order to keep the tax burden at a rational level, I propose to impose VAT at the truncated rate of 10 percent on these sectors.” (Bangladesh Marches towards Prosperity Paving the Way for Higher Growth, Budget Speech 2015-16, page 86)
The 10% tax rate was later “curtailed to 7.5% at the instruction of the prime minister,” but the reduced rate did not mollify the students.
In response to the protests, Prime Minister Sheik Hasina and Finance Minister Abul Maal Abdul Muhith initially stood by the tax. However, they eventually relented. According to a statement from the finance ministry, the tax is withdrawn retroactively to June 4, 2015, to prevent the disruption of “public life, as well as education activities.”
Student celebrations are reportedly widespread.
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