VAT, SD hikes take a toll on consumers
Muhammad Ayub Ali :
Habib Ullah came to Gulistan to buy apples for his family. However, the seller proposed a price increase of Tk 20 to Tk 25, compared to two days ago. He mentioned that he had bought apples for Tk 300 per kg the day before.
Speaking to The New Nation, Habib Ullah expressed his frustration, stating that he was compelled to purchase the apples at the higher price of Tk 320. He also criticised the interim government for increasing the value-added tax (VAT) and supplementary duty (SD).
According to a gazette notification, consumers will now be required to pay up to 15 percent VAT on various goods and services, including restaurants, biscuits, cakes, pickles, tomato sauce, clothing, tailoring shops, toilet tissue, napkins, towels, sweets, driving licences, non-AC hotels, spectacles, sunglasses, motor workshops, and lubricant oils, up from the previous rate of 5 percent.
Additionally, VAT on certain industrial items such as electric transformers, electric poles, and steel products like cold-rolled coils, limestone, and dolomite has been raised to 15 percent from as low as 5 percent, as per the notification by the National Board of Revenue (NBR).
The impact of the VAT and SD increase is already being felt in the market. The cost of several goods and services has risen. Restaurant owners have started charging additional VAT from customers, and businesses in the clothing sector have implemented the new prices.
Similarly, mobile phone operators have increased charges for calls and internet services. A visit to various markets and discussions with buyers and traders revealed the immediate effects of the new tax hikes.
Traders indicated that for products where prices had not yet increased, producers and suppliers claimed that the new prices would apply once the current stock was exhausted and new consignments arrived.
In various areas of the capital, the effects were noticeable. Restaurants that use Electronic Cash Register (ECR) machines provided by the NBR or issue VAT invoices to customers have already started charging the 15 percent VAT.
For example, if a customer’s bill is Tk 1,000, they now have to pay an additional Tk 150, whereas the extra cost was only Tk 50 before. Similarly, brand clothing stores have raised prices by Tk 150 per Tk 1,000, compared to Tk 50 previously.
The price of cigarettes has increased by Tk 60-70 per pack, and remittance workers are feeling the pinch as well. Their air travel expenses have risen by Tk 500. Airlines have started charging an excise duty of Tk 2,000 to Tk 2,500 for air travel. The construction industry has also been affected, with the price of rods rising by Tk 10,000 per ton due to the VAT increase.
Mobile phone costs have increased by 2 percent. A call that previously cost Tk 100 now costs Tk 128, an extra Tk 28. Tissues that were previously priced at Tk 25 are now being sold for Tk 28 in many places.
The impact of these price hikes is creating a burden on the public, pushing up inflation and increasing the suffering of ordinary people, said Ghulam Rahman, former president of the Consumers Association of Bangladesh (CAB).
Zahid Hussain, former lead economist at the World Bank’s Dhaka office, expressed surprise at the decision to increase VAT and SD on over 90 products and services in the middle of the year. He suggested that such measures should have been introduced in the annual budget, giving the public time to prepare.