VAT imposition in new budget on the education sector

VAT imposition may hit education sector badly
Karachi, May 26: With the beginning of the new academic year from April, parents of children studying at private schools are already paying from Rs10 to Rs50 more on a textbook, depending on the syllabus. But they fear that with the imposition of value-added tax (VAT) in the new budget on the education sector, prices of education-related items will go skyrocketing.

Already uncomfortable with the surging inflation rate, parents now feel really perturbed over reports of VAT imposition on the education sector. Even the stakeholders in the education sector oppose the government’s move to levy VAT. In case of levy of a new tax, the stakeholders may not feel the pinch and ultimately parents will have to swallow the bitter pill of paying extra.

Publishers say the prices of books published by the Sindh Textbook Board have also risen by Rs1.5 per book for class ninth and tenth and 25 to 45 paisas per book from class one to eight in the last one year.

Like every year, paper makers enhance the rate of paper in the peak season in January for the new session and later they reduce the price in April after the book buying spree fades.

Syed Zafarul Hassan of Qamar Kitab Ghar at Urdu Bazar said textbooks had become costlier by at least 20 per cent followed by a 25 per cent increase in the prices of notebooks and registers.

The condition of school-owners binding parents to purchase complete course either from the outlet on the school premises or from particular shops had reduced the rush in Urdu Bazaar, he said.

A school-owner in a Landhi locality said that a 200-page notebook now costs Rs32 to Rs35 as compared to the earlier Rs25-28. A 200-page register now sells at Rs60-65 as against the earlier price of Rs45-50. According to him, most publishers had raised the prices of books by three to 15 per cent.

A shopkeeper in Hyderi, North Nazimabad, said imported school bag prices had gone up by at least Rs100 apiece due to the devaluation of the rupee against the dollar.

However, there was some stability in the prices of stationery items as claimed by manufacturers. Parents also bear an increase in the monthly fees and annual charges by private schools, uniform and shoe prices, school van charges, etc.

Meanwhile, a branded shoe store operator said the company had not raised any price in the last one year, but hinted that it might do so in the coming months.

The chairman of the Pakistan Publishers and Booksellers’ Association, Aziz Khalid, and former chairman Khawer Iftikhar linked the price hike in books to an increase in paper prices by Rs7 to Rs10 per kilogram by local paper mills.

They said paper millers claimed that the rise in paper prices was caused by increasing prices of raw materials followed by gas, electricity and transport charges.

Last year, the prices of textbooks rose by 15 to 40 per cent while books of the Sindh Textbook Board went up by 15-20 per cent after an increase in printing paper prices.

Around 80-90 per cent of textbook buying has already been completed after the start of the new academic year in April, and the remaining buying is in the process as the new session in many English-medium schools (the Cambridge system, O and A levels) would get under way in August.

The publishers, who start printing books in December/January every year, said the increase in paper prices was not the sole factor behind the book price hike as the rise in utility charges, labour cost, printing and ink rates had a cumulative impact on book prices.

Blaming the poor quality of locally made paper, they said that the paper producers were unable to meet the rising demand.

They urged the government to either abolish the import duty on printing paper or reduce it substantially so that the prices of books could come down. The total impact of duties and taxes on paper imports comes to 48 per cent. They added that the annual import bill of books (from pre-school, Cambridge, colleges and universities) ranged from Rs500 million to Rs600 million. Only income tax is charged and there is no sales tax and customs duty on the import of books. The publishers have also been trying to get copyright of foreign publications and in case they succeed, the price of books would come down by at least 50 per cent, they said, adding that foreign publishers had given copyright to many Indian publishers.

For the first time, the Sindh government has planned to provide free books to first and second year students of government colleges this year.

Paper makers
The chairman of the Pakistan Pulp Paper and Board Mills, Kamran Khan, said the mills had raised the prices of high-quality printing paper up to Rs72,000 per tonne in January owing to a high demand in peak season from Rs64,000-66,000 per tonne but last month the increase was reversed.

He said the price of pa- per (made from recycled paper) also declined last month to Rs50,000-55,000 from Rs61,000 per tonne.

He added that prices were increased in January due to an increase in its raw material price (wood pulp) in the international market to $1,080 per tonne from $500 tonne. All other raw material used in paper making had also risen followed by power and gas tariff hikes.

Being an off season low demand, the price of paper would continue to fall further in the coming months, he said, adding that the installed capacity of 40 mills was 1,500 tonnes per day, but they were utilising it at 1,000 tonnes of paper a day. Due to the low demand of paper, he said four to five of the 40 mills had been closed down.

He said publishers had been urging the government for zero per cent rate on the import of printing paper. In case the government agrees to their proposal, the local industry would collapse.

Writing paraphernalia
The chairman of the Writing Instruments Manufacturers Association of Pakistan, Naeem Akhtar Yousuf, said the prices of pencils, ballpoint pens, fountain pens, markers, etc, had remained unchanged during the last one year.

The local industry has been fighting against the illegal arrival of Chinese brands through under-invoicing, the Afghan Transit Trade, dry ports, etc. Despite this, the share of local players in pencil manufacturing is 50 per cent while the other 50 per cent arrive through illegal channels. Similarly, in ballpoint pens, the local industry enjoys a share of 45 per cent and the rest by imported items.

The market share of local items has improved owing to the quality and competitive prices. Before 2007, Chinese items occupied 70 per cent market share.

Mr Yousuf feared that the imposition of VAT would wreak havoc on the prices of stationery items and the government should avoid imposing it on the entire education sector.

He said the industry has to keep the prices at competitive level, otherwise the Chinese goods arriving through illegal channels would gobble up the industry. He claimed that legal imports of stationery items had been ranging from two to four per cent.

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