In Bangladesh, the authorities are set to raise the VAT to 15% from 5% for goods such as restaurant meals, sweets, apparel and tissue paper. The move is part of a program to generate more revenue for the country at the behest of the International Monetary Fund, which approved a $4.7 billion loan to the government.
The excise duty on the domestic flight will be increased from Tk 500 to Tk 700. For SAARC flights, it has been increased from Tk 500 to Tk 1,000. For the flights to other countries in Asia, this tax will be increased from Tk 2,000 to Tk 2,500. For international flights to Europe, USA and elsewhere in the world, the excise duty will be raised from Tk 3000 to Tk 4000.
The supplementary duty (SD) on 10 imported items, including soap and raw tobacco, will also be hiked. This is consistent with the government’s broader goal of raising revenues and making tax structures cleaner.
It also intends to simplify VAT by cutting the list of items with reduced VAT. This is meant to enhance tax collection to counter the country’s low tax-to-GDP ratio. This follows a 2.62% drop in tax receipts over the first few months of the 2024-25 fiscal year.
Even so, consumer groups fear those higher fees will raise the cost of everyday items, adding pressure on people already facing significant inflation. Other experts say the government should prioritize collecting back taxes, rather than raising rates.
The NBR estimates that the revisions would contribute an additional Tk 12,000 crore to the state’s purse, which would help minimize the national dependence on them as well as improve its health. But experts caution the hikes could contribute to higher inflation in the near future.
Source: The Daily Star
