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Source: ESPN
New electricity tariff hike will be disastrous
ELECTRICITY consumers fear a 10 per cent tariff hike at retailers level from July 1 as the National Board of Revenue (NBR) is determined to realize 15 percent VAT in electricity bills from consumers instead of 5 percent now. This is going to happen when the new VAT law has also exempted additional VAT in electricity bills on consumers. It appears that the NBR is not ready to pay heed to the exemption and the severe impact of higher electricity bills on households and business with misleading interpretation of the law when the Finance Minister is almost blindfolded to increase revenue to make resources available to run an expensive regime.
Gas price has been increased from June 1 and if electricity price goes up again from July 1 like other new taxes on almost everything, its impact will be severe on the entire economy and business. Cost of manufacturing will rise, export competitiveness will erode and household affordability will be further squeezed with added cost of living. We call for sensible leadership to protect the people and help the economy and business to grow.
It appears that the government is using its power on people to foot the bills of an ever growing budget where no protest, no call for moral persuasion or any other pressure is working. There is no public institution, which can restraint the government from imposing an oppressive financial system on the people. People are helpless to pay higher utility charges now being raised several times in a year.
While implementing the new VAT Act, the NBR now wants the Power Division to include the 15 percent VAT in retail electricity bills of consumers – no matter how it will impact them. But controversy has arisen when Bangladesh Energy Regulatory Commission (BERC) is reportedly opposing the move on procedural ground but as it appears the introduction of 15 percent VAT in electricity bills is going to be inevitable and very soon.
At present NBR collects 5 per cent VAT on electricity tariff from consumers at but Power Division pays 15 percent on purchase of fuel, gas and coal that are need to produce electricity under the VAT Act of 1991. The system was that NBR will realize the remaining 10 percent from Distribution Companies instead of overloading consumers. It means 10 percent VAT rebate was available to consumers. But as most Distribution Companies tactfully avoided depositing money against such VAT bills to NBR over the years it now wants to directly incorporate 15 percent VAT in electricity bills.
The new VAT act provides for realizing 15 percent VAT in the first place from consumers and then call for recovering it from distribution companies to make relief available to consumers. But there is a fear that the proposed system will be so complicated and government support behind it may be so weak that consumers will have to bear the entire load at the end.
Gas price has been increased from June 1 and if electricity price goes up again from July 1 like other new taxes on almost everything, its impact will be severe on the entire economy and business. Cost of manufacturing will rise, export competitiveness will erode and household affordability will be further squeezed with added cost of living. We call for sensible leadership to protect the people and help the economy and business to grow.
It appears that the government is using its power on people to foot the bills of an ever growing budget where no protest, no call for moral persuasion or any other pressure is working. There is no public institution, which can restraint the government from imposing an oppressive financial system on the people. People are helpless to pay higher utility charges now being raised several times in a year.
While implementing the new VAT Act, the NBR now wants the Power Division to include the 15 percent VAT in retail electricity bills of consumers – no matter how it will impact them. But controversy has arisen when Bangladesh Energy Regulatory Commission (BERC) is reportedly opposing the move on procedural ground but as it appears the introduction of 15 percent VAT in electricity bills is going to be inevitable and very soon.
At present NBR collects 5 per cent VAT on electricity tariff from consumers at but Power Division pays 15 percent on purchase of fuel, gas and coal that are need to produce electricity under the VAT Act of 1991. The system was that NBR will realize the remaining 10 percent from Distribution Companies instead of overloading consumers. It means 10 percent VAT rebate was available to consumers. But as most Distribution Companies tactfully avoided depositing money against such VAT bills to NBR over the years it now wants to directly incorporate 15 percent VAT in electricity bills.
The new VAT act provides for realizing 15 percent VAT in the first place from consumers and then call for recovering it from distribution companies to make relief available to consumers. But there is a fear that the proposed system will be so complicated and government support behind it may be so weak that consumers will have to bear the entire load at the end.
