The country's 11 per cent inflation might go up if the government's plan to increase tax on goods and services, including air travel, cigarettes, LPG, clothes and restaurant food is implemented.
Traders are angry over the government's initiative to increase value added tax (VAT) and duties on goods and services.
Traders say that there has been a slowdown in business for about 4-5 months since the July-August protests. The government is going to take a suicidal decision like increasing taxes when business and trade are starting to return to normal.
On the recommendation of the International Monetary Fund (IMF), the National Board of Revenue (NBR) has planned to increase VAT on restaurants from 5 per cent to 15 per cent and to double VAT collection on non-AC hotels from 7.5 per cent to 15 per cent.
An NBR member said that a major change has been planned in the VAT structure in the middle of the fiscal year to meet the IMF conditions. Basically, the IMF has given conditions to the finance department. The NBR will implement the plan.
According to the IMF conditions, an additional 0.2 per cent will have to be collected as VAT. That is, an additional VAT of Tk 12,000 crore will have to be collected. We have prepared a proposal report on the plan to increase VAT in some sectors, reduce it in some and rationalise it in some. The proposal has been submitted at the meeting of the finance adviser. From there, if the President approves, an order can be issued on January 4-5."
He said that there has been no proposal to increase VAT or supplementary duty on any essential product or any product or service that affects the common man. Rather, VAT and duty have been reduced several times after the budget on several daily essential products.
In addition, air fares may also increase in domestic, SAARC and international destinations. It has been proposed to increase excise duty on air tickets. The duty on local flights may be increased from Tk 500 to Tk 700, for SAARC countries from Tk 500 to Tk 1,000 and for international flights from Tk 3,000 to Tk 4,000. Through this step, the NBR has set a target of collecting additional revenue of Tk 300 crore.
Imran Hasan, Secretary General of the Bangladesh Restaurant Owners Association, said, "If they cannot run the state, then the responsibility should be given to someone else.
There is no point in oppressing people. Will the country be taken to the edge of the abyss? Small traders have already suffered a lot. We have suffered from the movement and inflation. By increasing the burden of this tax, a system is being created for bureaucrats to steal."
He said, "We will go on strike. We will stop everything. We are talking to everyone. We will sit down and take the decision ourselves."
Kabir Uddin Ahmed, Chairman of Arunima Resort and former president of the Tourism Resort Industries Association of Bangladesh said, "The tourism sector is already facing closure. Then, if the price of air tickets increase, it will be further affected. Those involved in this sector will count losses. We will sit down with everyone and decide what to do."
Currently, there is 7.5 per cent VAT on ready-made garment outlet bills. Initiatives have been taken to increase it to 15 per cent. Initiatives are being taken to increase the VAT rate from 7.5 per cent to 15 per cent on sweets.
Under pressure from the IMF, the government is going to make some amendments to the VAT or VAT and Supplementary Duty Act. Additional VAT and duties may be imposed on 65 types of goods and services including medicines, powdered milk, cigarettes, and air tickets. As a result, the prices of these goods and services may increase by one point before the budget. This information has been given by the NBR.
Sources said that some amendments have been made to the VAT and Supplementary Duty Act. The draft of the Value Added Tax and Supplementary Duty (Amendment) Ordinance 2025, including these amendments, was given in-principle approval at the meeting of the Advisory Council on Wednesday, subject to vetting.
However, the decision to raise VAT and taxes on various products has been taken to increase government revenue collection rather than to meet IMF conditions, Finance Adviser Dr Salehuddin Ahmed said on Thursday.
He said that the hike in VAT on 43 items would not affect the prices of essential commodities or put extra burden on common people.
He said that higher taxes have been imposed on luxury hotels. "The objective is to ensure a balanced revenue collection system that does not cause inconvenience to common people."
According to the NBR proposal, there is a plan to collect most of the additional revenue of about Tk 4,000 crore from cigarettes, because cigarettes are the largest revenue-generating sector.
Cigarette prices and duties have been increased in the current fiscal year. However, prices and duties are being increased further for the remaining six months of the fiscal year.
NBR says that supplementary duties are being increased on cigarettes sector to increase revenue collection in accordance with WHO guidelines.
The report says that the supplementary duty is being increased by 1.5 per cent. The price is being increased by Tk 5 on low priced cigarettes, Tk 10 on high, medium and premium priced cigarettes. That is, the price of 10 sticks of low priced cigarettes will increase from Tk 50 to Tk 55.
For cigarettes supplementary duty is being increased from 60 per cent to 61.5 per cent. The price of 10 sticks of premium quality cigarettes will increase from Tk 160 to Tk 170, the price of 10 sticks of high quality cigarettes will increase from Tk 120 to Tk 130 and the price of 10 sticks of medium quality cigarettes will increase from Tk 70 to Tk 80. The supplementary duty on cigarettes is being increased from 65.5 per cent to 67 per cent.
According to the NBR, it will facilitate additional revenue collection of about Tk 4,000 crore from the cigarettes in next six months.
NBR says that usually in the budget, VAT, excise and supplementary duty of a product are increased, reduced or rationalised. But this time, with six months left for the fiscal year, VAT, excise and supplementary duty of some products are being increased, reduced or rationalised.
