Arshad Mahmood Awan
The state of higher education in Pakistan is a deeply concerning issue, with its roots extending far beyond the classroom. From outdated curricula and poor faculty quality to the rise of illegally established private institutions, the challenges facing the sector are numerous. Among these, the proliferation of unregulated and unaccredited private institutions has become a particularly troubling trend, one that not only exploits students but also severely impacts the nation’s financial integrity. These institutions, which are not recognized by the Higher Education Commission (HEC), are taking advantage of weak oversight mechanisms, offering substandard education and fake degrees that undermine the entire educational system. However, the consequences of this problem go beyond educational harm and have far-reaching implications for the country’s economy, particularly in terms of tax revenue.
In recent years, the emergence of these unregistered educational institutions has become a massive concern. These institutions are often set up by unscrupulous elements whose main objective is financial gain rather than educational integrity. The lack of proper regulation, coupled with insufficient monitoring, has allowed these institutions to flourish unchecked. Their operations largely consist of offering degrees that hold no real value and charging students for programs that do not meet recognized academic standards. These fraudulent institutions exploit an unsuspecting public by making promises of higher education that they cannot deliver, resulting in wasted resources for students and families who are often unaware of the institution’s lack of accreditation.
Beyond the direct harm to students, one of the most worrying aspects of these unregistered institutions is their failure to contribute to the national exchequer. The fact that these institutions operate outside official sanction raises serious questions about their financial transparency, their status as taxpaying entities, and the revenue that is lost due to their unregulated activities.
A significant aspect of this issue revolves around the tax evasion that is likely occurring within these institutions. Since these institutions are not registered with the HEC, it can be reasonably assumed that they may not be complying with tax regulations, further exacerbating the financial burden on the national economy. This issue has raised the concern of several citizens, one of whom took the initiative to approach the President of Pakistan with a request for an inquiry into the tax affairs of these unaccredited institutions. The concerned citizen, alarmed by the potential scale of tax evasion occurring right under the Federal Board of Revenue’s (FBR) nose, asked for a probe by the Federal Tax Ombudsman (FTO) to investigate the tax status of these institutions.
In response to this concern, the President referred the case to the FTO, instructing a thorough inquiry into the potential tax fraud being committed by these non-compliant institutions. However, despite more than a year passing since the reference was made, and despite the FTO beginning its investigation, no conclusive report has been submitted to the President. This delay raises serious concerns about the efficiency and commitment of the authorities responsible for investigating such significant matters. The lack of progress in this investigation strongly suggests that the officials involved have not prioritized the issue, failing to address what is undoubtedly a serious case of tax evasion and bureaucratic negligence.
The FTO had issued notices as far back as December 2023 to key officials in the Revenue Division, the Inland Revenue Policy, and the Large Taxpayer Office, requesting their input on the matter. Yet, the fact that no meaningful action has been taken since then raises troubling questions about the competency and integrity of the FBR. In a country already facing severe economic challenges, the failure to act swiftly in addressing such issues is not only alarming but also unacceptable. The Pakistani government cannot afford to turn a blind eye to the significant tax losses caused by these unregulated institutions.
One of the most critical questions to address here is why the FBR, an agency that is notorious for rigorously enforcing tax collection from law-abiding citizens, seems to ignore the potential large-scale tax evasion being committed by these unaccredited institutions. The FBR has no problem imposing stringent measures on taxpayers, often resorting to harassment to ensure compliance. However, when it comes to holding entities accountable for large-scale financial malpractice, it appears that the FBR is less vigilant. This discrepancy raises serious doubts about the priorities, competence, and integrity of the agency responsible for safeguarding the country’s financial interests.
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The HEC periodically publishes lists of unaccredited institutions, making it relatively easy to identify them. With this information already in the public domain, it should not be an insurmountable task to investigate the tax affairs of these institutions. The FTO, therefore, must expedite its investigation and ensure that the FBR does not continue to neglect its responsibilities in holding these institutions accountable. The need for swift action is critical, as the failure to address this issue could result in the continued exploitation of students, the defrauding of the public, and significant financial losses for the country.
There are several key questions that need urgent answers from the authorities: Are these unaccredited institutions registered with the FBR and complying with tax regulations? How much revenue is being lost due to their unregulated operations? And what actions are being taken to ensure their financial accountability?
In addition to addressing these questions, it is essential for the federal and provincial higher education authorities to establish a more robust mechanism that ensures all educational institutions, both public and private, are fully compliant with regulations. This should include a clear and firm deadline for unregistered institutions to either comply with accreditation requirements or face immediate closure. The continued operation of these fraudulent institutions without any meaningful oversight has led to a serious degradation of educational standards, defrauded the public, and resulted in significant tax losses. This kind of negligence cannot be allowed to continue.
The failure of regulatory authorities to take action on this issue has broader implications for the integrity of Pakistan’s educational system and its economy. It is critical that the authorities address the issue of unaccredited institutions with urgency and transparency. Only through swift action and improved oversight can the credibility of the higher education sector in Pakistan be restored and the financial losses stemming from these unregulated entities be mitigated.
The proliferation of unaccredited private educational institutions in Pakistan is a deeply troubling issue that poses serious threats to both the education system and the economy. The failure to regulate these institutions properly has allowed them to exploit the public while evading taxes, undermining the credibility of the education sector, and causing significant financial harm. Authorities must take immediate action to investigate these institutions, hold them accountable, and implement a more effective regulatory framework. Only through swift and decisive action can Pakistan prevent further financial losses, restore trust in the education system, and ensure a better future for its students.
