In adherence to the International Monetary Fund's (IMF) recommendations, the National Board of Revenue (NBR) has issued an ordinance raising VAT and supplementary duties on over 100 goods and services, including mobile internet, medicines, LP gas, confectionery items, fresh fruits, soaps, detergents, kitchen towels, and various other essentials.
Consumer Association of Bangladesh (CAB), has voiced concerns over the ordinance.
They argue that the increased duties will exacerbate the hardships of limited-income groups, who are already grappling with the relentless rise in the cost of living.
CAB leaders have called for the ordinance to be either repealed or deferred until after Ramadan.
In a statement issued on Sunday (12 January), CAB highlighted that global and domestic economic shifts had kept food inflation high throughout 2024, with rates nearing 13% in December, following a 14% peak the previous month.
Continuous price hikes in both food and non-food items have left lower and middle-income families struggling to make ends meet.
The leaders fear that the VAT increase will further fuel inflation, worsening the economic strain on the population.
Expressing frustration, the CAB leaders pointed out that unscrupulous traders have already begun hoarding and raising prices in anticipation of Ramadan, a trend observed particularly in essential commodities such as oil, pulses, sugar, and spices.
Despite a temporary dip in the prices of winter vegetables, the cost of rice has surged by Tk10-15 per kilogramme, depending on the variety.
The VAT hike, they warn, could provide an opportunity for further price gouging, potentially setting the market ablaze with higher costs during the holy month, leaving limited-income households unable to afford even basic fruits for iftar.
CAB leaders also criticised the government for the ineffectiveness of its various measures aimed at controlling inflation.
They noted that while VAT and import duties had been withdrawn on 29 items, the benefits had failed to reach consumers, with major corporate groups and importers pocketing the relief.
With rising inflation eroding real incomes, many families are forced to cut back on essential expenses, yet medical costs, particularly for life-saving drugs, remain unavoidable.
The recent VAT increase on medicines will inevitably lead to further price surges, adding another layer of burden on the general populace.
The statement concluded with a call for the government to broaden the existing VAT net, simplify tax procedures, curtail tax evasion, and ensure transparency and accountability within the NBR.
Additionally, it stressed the importance of focusing on direct taxes rather than indirect taxes to prevent further impoverishment of the low-income population.
The CAB leaders demanded immediate revocation of the VAT and supplementary duty hikes, warning of the dire consequences for the average citizen's livelihood.
