What began as an indiscriminate doubling of value-added tax on many services and products has evolved into a patchwork of fiscal tweaks following vehement public discontent.
The result?
A muddled compromise amid the spectre of inflation looming large, as the aftershocks of this taxation tremors continue to ripple.
What was ostensibly a bid to shore up an additional Tk12,000 crore in revenue has, in practice, morphed into an insidious financial squeeze on consumers.
The VAT hike, akin to a relentless tide, has swept across an eclectic range of goods and services—imported fruits, tissues, cooking gas, confectionery, beverages, tomato ketchup, paints, cinema tickets, and even optical frames.
The middle-class consumer, already treading water in an inflation-ridden economy, now finds their daily expenditures rising in an eerily incremental fashion—small enough to escape immediate revolt, yet significant enough to gnaw at disposable income.
Take, for instance, the ubiquitous biscuit—a humble staple of tea tables across the country.
Once a pocket-change indulgence, its price has ascended from Tk5 to Tk7, while the Tk10 variant now commands Tk13.
Fruit juices, similarly, have seen their prices stealthily climb, with a Tk20 carton now costing Tk25.
Retailers like Pran-RFL Group, currently absorbing the increased costs in a tenuous hope for government reconsideration, are walking a fiscal tightrope—one that may soon snap under commercial realities.
The eyewear industry, too, finds itself squinting at a steep cost escalation.
The VAT on plastic and metal spectacle frames has skyrocketed from 5% to 15%, ensuring that clear vision comes at a clouded financial cost.
Meanwhile, painting one’s walls—perhaps in hues of optimism—now carries a heavier price tag, as the supplementary duty on paints has been doubled from 5% to 10%.
A standard 3.6-litre can now retails for Tk1,900, a sharp uptick of Tk100, adding yet another layer of expense to household budgets.
Even the cost of essential cooking gas has inched upwards.
Bangladesh Energy Regulatory Commission (BERC) recently hiked the price of a 12kg LPG cylinder by Tk4, setting its official rate at Tk1,459.
However, retailers, ever resourceful in navigating fiscal loopholes, continue to charge above the stipulated price, justifying the markup as an unavoidable consequence of VAT adjustments.
A Case of Fiscal Myopia?
Economists and industry observers argue that this fiscal gambit, while ostensibly designed to augment government coffers, disproportionately burdens the urban lower-middle class.
Centre for Policy Dialogue (CPD) Research Director Khandaker Golam Moazzem aptly critiques the government’s approach, stating, "The easiest route has been taken—targeting consumers instead of tightening tax collection from evaders."
In other words, rather than deploying a scalpel to excise inefficiencies in tax collection, the administration has wielded a sledgehammer, indiscriminately battering an already strained populace.
While partial reversals on VAT hikes in select categories—including pharmaceuticals, restaurant meals, and mobile phone usage—offer a modicum of relief, the fundamental issue remains unresolved: Taxation policies that prioritise expediency over economic equity.
The failure to implement progressive taxation not only exacerbates income inequality but also places an undue financial yoke on households already reeling from inflationary pressures.
Ramifications of these VAT adjustments are only beginning to manifest.
As newer stock enters circulation, the full brunt of price hikes will become painfully apparent, leaving consumers little choice but to recalibrate their spending habits.
For retailers, the challenge is twofold—navigating dampened consumer demand while grappling with higher operational costs.
Will the government rethink its approach and offer further relief, or will consumers be left to bear the brunt of fiscal policy dictated more by revenue exigencies than economic prudence?
For now, as wallets grow lighter and shopping carts less full, one thing is certain—Bangladesh’s battle with inflation has entered a new, more taxing chapter.
