Saturday, May 26, 2018 | ePaper

Burden of VAT on realtors

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THE impending 15 percent VAT on rod will take a huge toll on construction of buildings, particularly in rural areas, and increase the cost of infrastructure in the infrastructural deficient country. A daily reported that if every tonne of rod is priced at Tk 50,000, each customer will have to pay Tk 7,800 as VAT under the new law, up from Tk 900 now. As a result, the development of the rural housing sector, which accounts for about 30 percent of the country's total demand for iron bar, will grind to a halt. It seems that the uniform VAT clearly subdues the people's aspiration and need for standard living. If tax and VAT take all savings and income of people, how do the citizens make their life fortunate?
The 15 percent VAT slated to be imposed on all products and services from July 1 will increase the plights of citizens though the blindfolded Finance Minister could not perceive this. It is feared that the consumption of rod in rural areas may fall to about 2-3 lakh tonnes from the existing 15-18 lakh tonnes. While the domestic steel mills growth became stable by manufacturing 50 lakh tonnes of steel a year, the government imposed deterrent will put the sector in disequilibrium and increase infrastructural deficiency across the country.
The VAT will also increase electricity bills for manufacturing the iron bars and the spending on raw material imports, all of these will ultimately affect the rod price. The new VAT will increase the government's revenue earnings from the sector but the industry will be squeezed and the people will be pinched. Rod prices began increasing just after the announcement of the proposed budget for fiscal 2017-18 on June 1. It is illogical to impose VAT on key building materials when the government is exempting VAT on manufacturing of luxury goods like refrigerators and air conditioners.
The infrastructure and other construction projects of the government account for 40 percent of the country's demand for rod, followed by private builders in urban areas, who use the rest 30 percent, and both will also suffer.  People accept the government's role as a   Social Contract where people pay tax and government provide facilities in exchange of tax, but the very notion of state is absent in our country. The government is apathetic to people's suffering which is illegal, irrational and unethical.

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