It is like adding insult to injury for the common people as the government has increased the Value Added Tax (VAT) and supplementary duties on over a hundred products amid rising inflation in the country.
The National Board of Revenue recently issued two ordinances for the increased VAT and supplementary duties as part of efforts to meet conditions set by the International Monetary Fund (IMF) and to rationalize taxes on certain goods and services.
This means consumers have to pay more than earlier for these products that is considered well-nigh impossible for them in some cases. It is because they are already at their wit's end due to growing cost of living in the wake of rising prices of many of the essential commodities.
The latest rice price spike is an example that has taken place in the peak harvesting time of this staple cereal and even after the government allowed import of rice in bulk quantity to stabilize the market. But government's efforts did not come to fruition and there have been price hikes in almost all varieties of rice, affecting people from all stratas mainly low-income group.
Similarly, sudden levying VAT on 100-plus necessary products will undoubtedly exacerbate consumers' woes as it is imposed on a range of products and services such as hotels, restaurants, telecommunication, internet, medicine, soft drinks, cigarettes and other goods.
For instance, the cost of talking and using the internet will rise due to the increase in supplementary duty on mobile phone services. Until now, supplementary duty was imposed at the rate of 20 per cent on the use of mobile phone SIM cards. This has now been increased to 23 per cent.
However, this is the second time in seven months that the supplementary duty on cell phone use has been increased. It was first increased by 5 per cent in June 2024, and now it has been increased by 3 per cent. Surprisingly, in just seven months, a 9.2 per cent supplementary duty has been imposed on consumers for this service.
Foodies will also be affected by the VAT increase as it is raised for restaurants and event management companies from 5% to 15%. Additionally, supplementary duty on bills at hotels or bars providing alcohol or similar beverages has been increased from 20% to 30%. The same increase applies to restaurants that serve alcohol.
Ready-made garments are not spared. VAT on bills of brand shops and ready-made clothing outlets has been increased from 7.5 per cent to 15 per cent. For pharmaceutical products, the local business VAT has been raised from 2.4% to 3%. As a result, the price of baby diapers, medicines and other essential items will go up significantly in the coming days.
We call on the government to look for some ways in order to lessen inflationary pressure on the consumers in general and marginalized people in particular in the face of levying increased VAT and supplementary duties on more than a hundred essential goods and services.
