With new cantonment tax, schools face closure or higher fees

Gulistan-e-Jauhar’s schools had to use residential plots as no commercial ones existed for them.


Noman Ahmed October 12, 2012

KARACHI:


Private schools in Cantonment Board Faisal limits that are confronted with a tax have to face the tough choice of either increasing their school fee or shutting down.


Iqbal Adenwala is one of many such administrators. He manages one branch of his Little Folks School chain in Gulistan-e-Jauhar. The cantonment board has served him notice to pay the property tax which is six times higher than what he paid last year.

Around 400 schools set up in residential buildings as commercial entities have also received the notices. They have been asked to pay the tax applicable on profitable businesses - that is 15% of a commercial building’s annual rental value which is estimated by the cantonment board. Up till now, the school managers in the area were paying residential building property taxes and professional tax for running schools.

A cantonment board official argued, however, that the schools charge high tuition fees which make them profitable institutions. “In addition to this, these schools were involved in the violation of building by-laws by using residential plots commercially,” said cantonment board office superintendent Yousuf Baig. “What we have simply proposed is for them to pay a commercial tax for commercial use.” The board is legally authorised to demolish buildings which go against the terms and conditions of the lease agreement.

In 2008, the cantonment introduced building by-laws that said that residential buildings cannot be used for any other purpose without its approval. They would also need a ‘no-objection certificate’ from the leasing authority. Following this, the board issued warnings to around 70 private schools within its limits to either quit using residential buildings as school premises or pay a commercial property tax.

Baig added that according to the Cantonment Board Act of 1924, only religious buildings, educational institutions which provide free education and playgrounds were exempted.

Adenwala, who was now 62 years old, recalled that these conditions never existed since the time his maternal grandfather, Qasim Wadiwala (late), established the very first school branch around 52 years ago. He himself had studied at the premier branch and now oversees the family enterprise. The last one that was set up in Gulistan-e-Jauhar around 10 years back “unfortunately” falls within the limits of Cantonment Board Faisal, he lamented.

“Those were the good times when the government supported schools and even gave them grants,” recalled Adenwala. “We started off with a school fee of one rupee a month and it is now Rs1,400 due to the costs.”

The average tuition fee of private schools in Gulistan-e-Jauhar is around Rs800 a month, though parents complain schools make extra money by coming up with different excuses throughout the year.

“Now, if we pay these types of taxes we have to include them in our fee structure as a ‘cantonment tax’ which will surely be in the thousands,” said Sharfuz Zaman, who is the chairman of the Private Schools Management Association.

Zaman has asked the provincial education department either to deal with the cantonment board or allow schools to increase their fees. “Private school fee structures are subjected to the approval of the directorate and the government allows schools to raise the fee by not more than five per cent a year,” he explained.

Zaman claimed that around 99% of private schools in Karachi were set up on residential plots and registered with the education department’s directorate of private schools after they meet their criteria. He felt that schools should have to deal with the education department and not the cantonment board. For his part, the deputy director of private schools, Muhamamd Saleh Bhutto, told The Express Tribune that the education department will discuss the tax. He felt that heavy taxes on schools seemed inappropriate and the department had not received such complaints from other areas of the city.  “Premises which are chosen to impart education cannot be declared as entirely commercial as it is a service to the nation,” he argued.

The cantonment board actually has not set aside or fixed plots for schools which is why private schools were asked either to commercialize or close, pointed out Shiraz Akram, who runs City High School in Gulistan-e-Jauhar.

Closing the schools is not a solution as well, said Akram, referring to parents who were already upset with the owners of schools like St Dawood Secondary School, FM Public School, Mother’s Dream School and Multi Talent School which have shut down over this very problem.

Published in The Express Tribune, October 12th, 2012.

COMMENTS (1)

Antebellum | 11 years ago | Reply

The owners of these private schools run them as profit-making businesses, they should be taxed accordingly. However, there should be no taxes on charity or not-for-profit schools.

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