Bangladesh Restaurant Owners Association (BROA) on Thursday demanded withdrawal of the decision to increase value added tax (VAT) on hotels and restaurants.
BROA threatened to indefinitely shut down restaurants unless the decision is withdrawn.
At a press briefing held at a city hotel, Imran Hasan, BROA Secretary General , said, "When high inflation has been prevailing for more than two years, the interim government has taken the initiative to suddenly increase VAT in the middle of the fiscal year without expanding the tax base or taking measures to prevent tax evasion. This will have a negative impact on common people."
The National Board of Revenue (NBR) is planning to increase VAT on hotels and restaurants from 5 per cent VAT for dining in general quality and air-conditioned (AC) restaurants to 7.5 per cent.
The VAT for non-AC hotels is proposed to be doubled from 7.5 per cent to 15 per cent.
Hasan criticised the government for relying on VAT as a primary revenue source instead of expanding direct taxes.
"Only about 525,000 businesses are VAT-registered, with roughly 350,000 paying VAT regularly. The NBR has not taken effective steps to bring the millions of unregistered businesses under the VAT net," he said.
BROA said it will not be possible to collect 25 per cent tax from consumers in a country when high inflation has been prevailing for more than two years. Food prices cannot be increased at will. However, during the last government's tenure, the cost of services was almost doubled. There is a consequence of the increase in the price of food products. Due to high inflation, the restaurant business has already decreased by 30 to 40 per cent. In this situation, if VAT is increased, the situation will deteriorate further.
Imran Hasan said that like the previous government, this government is also increasing pressure on small entrepreneurs and consumers.
Earlier, big businessmen were given benefits, and the interests of small businessmen were not protected, this continues to be the case.
He also blamed FBCCI for the situation saying it only protected the interests of big businesses.
He said that this situation has been prevailing not only in last 15 years, but since independence. The government's decision to increase VAT will affect small businesses and will have a negative impact on inflation and employment.
Imran Hasan also said when high inflation prevailed for more than two years, the interim government has suddenly taken the initiative to increase VAT by three times in the middle of the fiscal year without increasing the tax base or taking measures to prevent tax evasion.
Increasing VAT rate cannot work, he said, adding VAT on restaurants was reduced to 5 per cent from 15 per cent as demanded by BROA.
The NBR chairman said that VAT collection increased by 19 per cent. Now, if the VAT rate is increased again, it will affect business and ultimately VAT collection will also decrease, he said.
Imran Hasan that poverty could not be eradicated anywhere in the world on the advice of IMF.
Imran Hasan described the interim government as an NGO government.
