THE government鈥檚 having increased value-added tax and supplementary duty on more than a hundred products and services by way of two ordinances, promulgated on January 9, has rightly raised the call for the government to walk back the decision. The products and services that have become dearer include mobile talk time, internet usage, biscuit, soap, detergent, tissue paper, imported fruit, restaurant bill, sauce, spectacles, clothes, liquefied petroleum gas, milk, confectionery items. The increase in the tax and duty would further constrain people, especially the poor and low- and middle-income groups, who have already had a declining purchasing capacity because of a double-digit inflation, calculated at 10.89 per cent for December 2024, that has persisted for a few months. The move will leave people hard-pressed as Petrobangla has already sought an increase in gas prices supplied to industries by 152 per cent which could come into force in March after a hearing by the Energy Regulatory Commission. The National Board of Revenue on January 7 also doubled to 20 per cent the corporate tax on industries producing motorcycle, freezer, refrigerator and air conditioner, which will remain in force in 2026鈥�2031 financial years. With no effective government measures to discipline goods market, it is the consumers, especially people down the lower economic rung of society, who would feel the pinch most.
Whilst all this happens, the government on December 31, 2024 stopped the sales of goods on trucks that the Trading Corporation on October 24 that year launched on 50 locations in Dhaka and 20 locations in Chattogram to help the poor to cope with the high inflation. The government has also cancelled 4.3 million of the 10 million family cards, which the Trading Corporation earlier issued, on grounds of selection errors that are reportedly being corrected. This has also promoted a public call for the resumption of the sales of goods on trucks of the Trading Corporation. The government, the finance adviser for that matter, on January 2 sought to dismiss any adverse impact of the increase in value-added tax and duty, noting that the increase has become imperative to meet the budget deficit for the 2025 financial year. The National Board of Revenue missed the revenue collection target by Tk 253.21 billion in the past financial year. Experts view that all these measures to increase revenue collection are linked to the disbursement of the third tranche of $645 million of the $4.7 billion International Monetary Fund loan that would be reviewed in February. Experts also view that the government could handle the situation by an expenditure control mechanism, instead of revenue mobilisation, to meet the budget deficit.
The government should, therefore, immediately review the increase in value-added tax and supplementary duty on goods and services to provide relief for people, in general, and resume the sales of goods on trucks by the Trading Corporation to afford the poor and low- and middle-income groups, in particular, some breathing space. It should also widen the income tax network and stop pursuing indirect tax measures that disproportionately burden people.