Tax on books and journals: In whose interest?

If it were possible for many of us to know what is out there, we would have penetrated the illusion of the annually organized Ekushey Book Fair, which displays mostly books written in Bangla. The Dhaka Book Fair, also annually organized, and for the last eleven years, though it promises on the surface to let us see what is out there, is now no more than a remnant of its original conception.

It was conceived as a true international book fair where a cross-section of the world's best publications would come into the view of the masses. International publishers, through their country distributors, attended enthusiastically for the first three years or so. But then, as past and present governments tightened the knowledge inflow through taxation measures, participation dwindled. Participation also dwindled because the Dhaka Book Fair had been progressively made into the alter ego of the Ekushey Book Fair. Technically, the global book supply chain is affected through the taxation measures. The legal and economic incidence of the government's tax measures had been without disparity, i.e. the country distributors or the book importers bear the entire burden of the taxes.

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Various reasons abound as to why knowledge inflow should be tightened. For example, it has been said that importation of foreign books poses threat to the local publishing industry, to our linguistic culture, and to our religio-indigenous self. It must be realized that there is no equivalent to a McGraw Hill or a Brill publishing house in this country. Most of the higher education textbooks and journals cannot be created and/or marketed by our local publishers, and book importers or distributors are needed to serve the national and private universities of this country through a benchmarked and standard channel for the acquisition of books and journals. The brain drain, the nature of the book selling market, and the sorry state of research output from national universities can in considerable part be attributed to the sieving of know-how through the taxation of foreign books and journals. Development of educational opportunities is at risk. A host of activities have been made inevitable due to the taxation policy, especially activism by international publishers in the area of intellectual property rights and lobbying for the welfare of their country distributors -- a vital element in the overall supply chain of these international publishers.

Some foreign books, which are there in our libraries, lie dormant because of the language difficulties of our students. The surprise is importation of English language textbooks and reference materials are tightly controlled now than ever before. Duty had been levied against English literary works, or on the so-called "dual-purpose" educational materials. The need for a grip on a second language is potently felt nowadays. In contradiction to the adopted national book policy, steps such as using different tax codes to decide on the size of tax liability of book/journal imports and instituting a VAT system in the last year or so defy common sense. Non-tariff measures are also being made unbearable -- the pre-shipment inspection penalty is at an all time high (not to mention that a pre-shipment inspection charge is mandatory). The current tax code classifies academic textbooks, references, and journals as "other books," and that results in an increased tax liability for the book importers or distributors of international publishers. How can the authorities classify academic material as non-academic "other books"? In fact, the provision in the national book policy states that all required books for the nation should be imported. Are academic books for the nation not needed? Anyway, the current operating and regulatory environment is non-conducive to knowledge inflow.

Our Finance Minister recently commented: "Reform is not revolution." Indeed, one asks not even for reform but for review of the import/taxation policy in the realm of higher education textbooks and journals.

All the parties to the issue -- the relevant ministries, the distributors of international book publishers, the local publishing industry -- should sit and discuss a way out of this quagmire.

Let us part by looking at some numbers. Import duty is at the rate of 15 percent on so called "other books." Advance income tax is set at 3 percent. Import Development Surcharge is 4 percent. Pre-shipment inspection (PSI) charge is 1 percent. PSI penalty for not doing the PSI applicable to "other books" is between 10-20 percent. It is a big crime nowadays to import academic textbooks and journals. Total VAT comes to 3.5 percent. Besides these duties, taxes, VAT, and surcharges, importers also bear air/sea freight, customs clearance fee, inland transportation, insurance, bank charges, and other invisible expenditures.

Let us now produce the big picture that the numbers do not convey. The resulting liability for the book importers or distributors is such that they are at times left with a discount/commission margin of at most 3 percent per volume of import. A capital-intensive venture with such a return is not much of an incentive for any entrepreneur. The tragedy is that many corrupt officials' margin in this country is at least 300 percent. The book distributors serve humanity first, and Bangladesh second. Is it an open question as to why they continue despite the operating environment in silent tears? The current self-defeating taxation policy actually bleeds dry the possibility of our future development.

The author is a Bangladeshi external student at the London School of Economics.