Friday | 17 January 2025 | Reg No- 06
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Friday | 17 January 2025 | Epaper
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Consumers grow restive over persistent price gouging 

Published : Friday, 17 January, 2025 at 12:00 AM  Count : 95
Motaher Hossain
Midway through the fiscal year, the government has issued ordinances to increase duties and taxes on over 100 products, sparking widespread criticism from citizens, trade organizations, political parties, and other sectors of society. Recently, leaders from various political parties, including BNP, expressed concerns about rising commodity prices while attending the first national council of the "Amar Bangladesh Party" (AB Party) at Suhrawardy Udyan in the capital.

At the event, they stated, "Commodity prices are on the rise. Despite such a severe crisis, a government directive can suddenly increase taxes and VAT on 100 products. Moreover, closing down the Trading Corporation of Bangladesh's (TCB) truck sales deprived starving people of essential food supplies. This reflects a focus on theory over practical life. "They understand economic definitions well but fail to grasp that economics is about managing daily life. People are suffering significantly in their daily lives."

The leaders pointed out that the increases in VAT, taxes, and prices of gas and electricity are part of a persistent trend that benefits no one.

The National Citizens' Committee has demanded the immediate withdrawal of these decisions, urging the government to reinstate TCB's truck sales. Similarly, the Dhaka Chamber of Commerce & Industry (DCCI) has called the decision to raise VAT a "self-destructive move," predicting that it will slow down the economy. Economists, business leaders, industrialists, investors, and the general public have all strongly criticized the government's decision. The subsequent rise in the cost of living, inflation, and commodity prices threatens to shutter industries, further shrinking job opportunities.

Some political parties have proposed alternatives to revive the economy. To increase revenue, the government recently issued two ordinances that raised value-added tax (VAT) and supplementary duties on over 100 goods and services. While revenue growth is necessary, it is crucial to ensure that such measures do not exacerbate public suffering by raising living costs and inflation.

In the face of these challenges, the National Citizens' Committee proposed expanding the tax base without harming the general population. They also recommended curbing corruption in the existing tax framework to boost revenue. Highlighting past corruption, they urged the government to recover $234 billion siphoned off abroad, as reported by economist Debapriya Bhattacharya's white paper. Additionally, tackling loan defaults-estimated to exceed 2 trillion BDT-and recovering bank funds lost to corruption could significantly alleviate economic pressure.

Midway through the 2024-25 fiscal year, the government increased VAT, supplementary duties, and corporate taxes on over 100 goods and services without consulting stakeholders. DCCI labeled the move "suicidal" at a press conference on the current economic situation.

Speakers at the event highlighted the already high inflation, rising dollar exchange rates, and stagnant investments following public uprisings. The high-interest rates on loans further complicate matters. Under such circumstances, raising VAT will slow the economy and burden the masses.

This decision has exacerbated the challenges of doing business, with the latest example being the increase in taxes on motorcycles and electronics. For instance, income tax on certain products has been raised from 10% to 20%, which will increase motorcycle prices by 10-15% within three months. Businesses argue that cutting government expenditure by 20% could save 500 billion BDT annually, offering a more sustainable alternative to tax hikes.

Business leaders argue that political stability is essential for a conducive business environment. Former FBCCI President Abdul Awal Mintoo emphasized that political uncertainty has deterred investors, while the recent increase in gas prices threatens industrial production and exports.

With rising production costs due to high dollar rates and increased taxes, maintaining industries like garments and plastics will become even more difficult. Business leaders warn that if the current sense of fear and uncertainty persists, the crisis will deepen further. They stress the need for business-friendly policies and stable conditions for economic recovery.

Economist Dr. Debapriya Bhattacharya emphasized the need for better market regulation. Former financial advisor Dr. Salehuddin Ahmed added that the VAT hikes were not solely to meet IMF conditions but aimed at increasing revenue. However, experts believe these measures disproportionately burden ordinary people, as many of the taxed goods are essential daily items. Economist Professor Anu Muhammad criticized the government's decision as irresponsible, stating that the increase in duties on over 100 products was a grave mistake. 

We hope that the government will reconsider the increased duties imposed on over a hundred goods and services in the greater interest of the people. Otherwise, the hardship, expenses, and suffering of the lower- and middle-income classes will increase, which surely no one desires. Instead of imposing higher duties on goods and services, the focus could be shifted to streamlining VAT and income tax collection and eliminating corruption, irregularities, and harassment in revenue collection. By making the revenue system more efficient and transparent, achieving the government's revenue targets would not be impossible.

The writer is a journalist and General Secretary, Bangladesh Climate Change Journalist Forum


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