Increased Taxes on Over 100 Goods and Services- The Impact on Consumers
Dhaka: In the second half of the ongoing fiscal year 2024-2025, the government has increased the Value Added Tax (VAT) and supplementary duty on over a hundred goods and services. This move could potentially lead to a rise in the daily expenses of ordinary people.
On Thursday night, the National Board of Revenue (NBR) issued two ordinances related to this matter. The ordinances are the Value Added Tax and Supplementary Duty (Amendment) Ordinance 2025 and the Excise and Salt (Amendment) Ordinance 2025.
The repercussions of these ordinances will be felt across various products and services. For instance, due to the increase in supplementary duty on mobile phone services, the cost of making calls and using the internet may go up. Similarly, the prices of clothing and dining out could also see a spike. Additionally, the list of items facing price hikes includes sweets, medicines, LP gas, fruit juices, soft drinks, biscuits, eyeglass frames, and cigarettes, among others.
According to Mustafizur Rahman, a respected fellow at the Center for Policy Dialogue (CPD), a renowned private research institution, such taxes are usually raised when the country is experiencing high inflation. The pressure of high inflation affects not only people with low incomes but also the middle class. With the imposition of new taxes and duties, the pressure on this segment of the population is expected to increase.
### Where Expenses Will Rise
For a long time, there was a 20% supplementary duty on the use of SIM cards or recharge cards for mobile phones. This has now been increased to 23%. Consequently, the costs of making calls and using the internet on mobile phones are expected to rise. The VAT on bills at clothing outlets and the manufacturing tags of brands has been raised from 7% to 15%. Moreover, VAT on all types of restaurants has been increased from 5% to 15%.
The list of items facing tax and duty hikes also includes tissues, cigarettes, almonds, mangoes, lemons, grapes, apples and pears, fruit juices, all types of fresh fruits, colors, detergents, paint, motherboards, potato flakes, eyeglass plastics and metal frames, reading glasses, sunglasses, electrical transformers and the oil used in them, lightbulbs, CNG tar, GI wire, and more. Additionally, travel has also become more expensive.
Before this, during a meeting of the Advisory Council of the current interim government on January 1, the proposals for tax and supplementary duty increases by the NBR were approved. Following the opinions of the Ministry of Law, the ordinances were issued after the approval of the Chief Advisor and the President. As there is no national parliament, the government has made this decision regarding the tax and duty increases through the ordinances. It is known that this decision to raise taxes and duties on over a hundred goods and services has been taken as a condition for the loan from the International Monetary Fund (IMF).
Bangladesh Time: 2350 hours, January 9, 2025
JD/MJ
