Friday, August 18, 2017 | ePaper

Economists for 12pc VAT to be tolerable

  • Print
IN a pre-budget meeting economists have said the Value Added Tax (VAT) rate should be 12 percent in the country in line of the low- and middle-income countries in South and East Asia and we must say it is a highly sensible proposition. Their suggestion at a meeting at Brac Inn also asked the government to adjust VAT rates with prices of utilities such as gas and electricity to avoid serious burden on consumers. Particularly they have called for reducing the prices of kerosene and diesel used by the poor and in mass transports and irrigation. They are quite right when they said it is important to keep the adverse impact of higher VAT on low-income people.   

Economists have pointed out that VAT rate at 15 percent is on the high side for Bangladesh when compared to neighbouring low-and middle-income countries in the region. They have therefore rightly suggested the rate should be at 12 percent. The government is going to introduce VAT at 15 percent it in the next Fiscal Budget for 2017-18 to begin from July this year. Economist Towfiqul Islam Khan said the global standard rate is 15 percent, but in South and East Asia and among low-and middle-income countries, it is 12 percent. So Bangladesh must go for it instead of overloading business and common people with higher rate in a single drive.

The next budget will be for Tk 4.02 trillion as the Finance Minister hinted. Economists said the revenue expansion in the next budget with a huge jump in VAT collection will enable the government to lower the rate without adverse impact on revenue collection. They have feared that depreciation of the value of money with a rice price hike and further increase in tariffs for electricity and gas will add new burden on industry and common users of utilities. Consumers will have lower disposable income due to declining remittance inflow and the increase in indirect tax coverage.

To reduce the impact, they have suggested cuts in the prices of kerosene and diesel, which would help raise consumers' disposable income.

Economists have made a timely warning that the cost of production in almost all sectors might go up with new VAT law. So the government must not lose sight to its adverse impact on the economy and business.

In our view the government must not take giving a huge budget as the only priority when a bigger part of such budget is being misused in big corruption and grabbing of fund under the cover of mega projects. Big budget is targeting businesses and common people to pay but the benefits are mainly going to people at the Center of Power and getting construction and supply contracts. So there must be balanced outlook to leave lower burden on poor and low-income people. Business also must not be unduly overloaded. So the VAT law must be put into affect accordingly.


More News For this Category

Doctors' must prioritise on their moral and professional obligations first

THE fact that many of our public hospital doctors' work in private clinics for an extra buck is not a new phenomenon, but this widely practiced moonlighting should not

Import is not enough; make sure people get rice at low cost

THE country is apparently facing acute food shortage; which is evident from a government decision to increase food grains import to 20 lakh tonnes this year from earlier announced

Readers’ Forum

Act fast to complete Moghbazar flyover :Traffic jam in Moghbazar and nearby areas has been increased due to the construction of the Moghbazar-Mouchak flyover. The flyover was supposed to

The fight against famine needs more voices

Liz Schrayer :If you were a teenager in the '80s, you remember "We Are the World" - a song that became the fastest-selling American pop single in history. It's

Anti-corruption concerns mobilising global sentiment

John Feffer :In democracies, corruption works in a similar way. The opposition slams the ruling party for all the ways it uses the levers of government power to benefit

Business co-financing : An alternative approach to realise SDG1

Paul Voutier :Sustainable Development Goal One (SDG1) calls for over one billion people to begin earning more than $1.90 a day by 2030. For a household of five, this

Saudi initiative to end Yemen war highly appreciable

SAUDI heir to the throne Mohammed bin Salman reportedly want to end the two-year old war in Yemen is perhaps one of the best news from the region, although

Weak construction of highways and public safety

MOST of the national highways and local roads are severely battered now by torrential recent rains, floods and from lack of regular maintenance. They are in a dilapidated condition

Factory farming: A health threat to global community

Fiona Harvey  :The use of antibiotics in factory farms in Asia is set to more than double in just over a decade, with potentially damaging effects on antibiotic resistance around

Celebrity women as UN Ambassador

Felix Dodds :I realize it's a lot easier saying this now after the film of the same name has come out and has taken over $400 million in US box