ON top of a bucket full of local problems, who thought the people in Pakistan would also need to worry about US President Donald Trump’s tax bill?

Pakistanis already in the US pursuing doctoral programmes, and those aspiring for a terminal degree from the world’s education capital, will be forced to reassess and readjust plans to match the new odds.

The tax bill, which is expected to be enacted soon, would make higher studies in the United States economically unviable for international students.

The bill has proposed to repeal the current clause of graduate student’s tuition waivers to be counted as income, making them subject to taxes. Normally in postgraduate programmes, universities cover the student’s tuition fee in exchange for conducting research and teaching courses.

Currently, the tax applies only on the students’ stipend while the waived tuition fee, more than double the stipend, is not liable for tax. On an average the annual stipend is in the range of $30,000 to $35,000 annually in the US. The tuition fee is normally in the range of $50,000 to $75,000 per year.

With enactment of new tax laws, the taxable amount for students may shoot up to unserviceable limits, as tuition waiver ($50,000) has been clubbed with stipend ($30,000) to arrive at a taxable amount of $80,000.

As a result, the tax obligation for PhD students is expected to increase four times, eating into their annual stipend by as much as 25 per cent. The consequences for research scholars who are already subsisting on a minimum will not be hard to stipulate.

A big majority of Pakistani scholars, according to educationists and officials of the Higher Education Commission (HEC) of Pakistan, come from middle-class backgrounds and have already used up family resources on pre-graduation studies. The possibility, therefore, of covering the hole in the income because of higher tax payment appears bleak.

Pakistanis already in the US pursuing their education will be forced to reassess and readjust plans to match the new odds

“I am afraid that for many it could prove to be an insurmountable challenge and a rude end to a dream of excelling in the area of their academic interest. While the more enterprising might succeed, the most academically inclined people are fragile and by nature tend not to be worldly wise,” commented a worried professor.

Is the HEC aware of the situation and in a position to guide the country’s most valuable human asset? When reached over phone in Lahore, Prof Dr Mukhtiar Ahmed shared the concern.

“I am glad you pointed this out. Yes, we are required to assess the situation and work on ways to deal with it. I intend to direct my research team to study and draft proposals. I can’t tell the exact number of Pakistanis currently in US for doctoral and post-doctoral research at the top of my head, but they run in hundreds as the US is the most preferred destination of Pakistani students,” he said over the phone.

Thinking aloud, he said that new tax laws might divert the tide towards Europe and to campuses of US universities in the Middle East and the Far East. “It warrants research and I would only be in a position to give you an informed opinion after looking deeper into the issue at hand,” he added.

Some Pakistanis who did their undergrad from US and wished to go back for an advanced degree after gaining work experience at home expressed anxiety.

“The academic environment was stimulating and the quality of faculty inspiring in the college I managed to land in. Yes, I wished to return to US to complete my degree but the election of Donald Trump and the growing intolerance of immigrants slowed me down.

“I was already exploring UK. Now, after the tax reshuffle I suppose it would not be a matter of choice for me,” Maria, working as at a local private firm, said. Unable to land a job, she returned from US two years back after completing her undergrad in international relations from a prestigious US university.

“I think the proposed changes in tax laws are defeatist. It is the beginning of the end of US supremacy,” said another professional who studied in US and see a big role of foreign students in research in that country.

“The US lead was rooted in its ability to innovate and think ahead, in aligning its thinkers and researchers’ work with the needs of the society, in its ability to attract the best minds from all over the world and use them to keep an edge in many fields of knowledge.

“PhD students are integral to the undergraduate education model. Besides research, they teach, grade tests and assist at a low cost. What is not good for the international students body cannot possibly be good for universities and the society at large,” said Amin, an international graduate.

Last month, the Trump administration passed the tax reform bill that seeks to simplify the tax system, eliminate inheritance taxes and slash taxes for businesses drastically.

If implemented, individual income tax brackets in US would be cut down from 7pc to 3pc and corporate tax rate from the current 35pc to 15pc. The bill has also been cleared by the Senate by a narrow margin (51 to 49).

Published in Dawn, The Business and Finance Weekly, December 18th, 2017