Government increases ‘study abroad levy’ on outbound students
Presenting the national budget for fiscal year 2023-24 to parliament at the end of May, Minister for Finance Prakash Sharan Mahat announced a 3% tax on the money students send from banks in Nepal to the respective colleges and universities abroad. Banks have already started charging the tax following the budget presentation.
“It is ridiculous that the government is taxing education. We would have never sent our children abroad if there was an assurance of quality education here [in Nepal],” Raj Kumar Khadka, father of a student flying to Australia for undergraduate studies, told University World News.
On 15 June, Khadka sent US$15,000 (NPR1.97 million) to the Crown Institute of Higher Education, Sydney, where his son is enrolled for a bachelor degree in accounting. He had to pay an additional US$450 (NPR59,000) in tax.
Khadka says the money he had to pay in tax could have been used in shopping or in buying flight tickets for his son. “Middle-class people like me don’t have millions in savings. I had to take out a loan to pay for my son’s studies. By imposing tax, the government has only increased my loan amount,” he said.
For over a decade, the government imposed a 1% tax on the money students sent to foreign academic institutions. It was doubled two years ago to 2% and now increased to 3%.
The number of Nepali students opting for foreign degrees has been significantly increasing every passing year. While as many as 114,000 students acquired the No Objection Certificates in the fiscal year 2021-22, the number reached around 105,000 by 15 June this year, a month before the current fiscal year concludes.
“If the present trend continues, the record from the previous fiscal year will be easily surpassed this year,” Basu Dev Wasti, chief of the No Objection Certification department under the Ministry of Education, told University World News.
According to records at the Nepal Rastra Bank, students sent US$571 million (NPR75 billion) to different countries to pay their fees in the last 11 months of the fiscal year 2022-23. As much as US$515 million (NPR68 billion) flowed out of the country in the 2021-22 financial year.
Creating hurdles to study abroad
Education consultancies said the government was creating one hurdle after another for students hoping to study abroad. In April the Nepal government came up with a policy to stop issuing No Objection Certificates to students leaving the country to study diploma and languages courses abroad.
The decision was revoked within a month following pressure from education consultancies, students and foreign institutions offering such courses. Such certification is a requirement for sending money from Nepal to academic institutions abroad.
“It is the fundamental right of students to choose where and what to study. Increasing the tax is yet another attempt at discouraging students,” Rajendra Baral, chairperson of the Educational Consultancy Association of Nepal, told University World News.
“Those travelling abroad not only get an international standard education but also get huge exposure [internationally]. The focus of the government should be on creating an environment to bring them back home after they complete their studies rather than trying to obstruct them from flying.”
Baral claimed the cash-strapped Nepal government was taxing students to generate money for state coffers. For the first time in history, the government on 29 May presented a new budget for the upcoming fiscal year that was lower than the budget presented for the current fiscal year.
Two months ago, the government had to delay paying salaries for teachers and security forces and pensions for retired teachers after failing to generate enough revenue.
Students opting for higher studies abroad say it is a compulsion rather than their choice to leave the country because they are not getting what they expect from domestic academic institutions. They blamed this on a failure of domestic universities to abide by the academic calendar, poor quality of education, coupled with uncertainty of job opportunities after graduation.
“We need quality education to prove ourselves in this competitive world. Barring a few exceptions, our quality of education is poor. And most importantly, there is no guarantee of job opportunities even if I graduate with good grades,” Sayana Pantha, who is moving to Australia for a bachelor degree, told University World News. “I won’t have to worry about finding a job if I complete my studies in Australia.”