Imagine sitting at your favourite restaurant, biting into a piece of pizza, when suddenly, the bill arrives, and it’s not just your appetite that’s ruined. A modest meal now comes with an immodest surcharge, leaving you wondering if you ordered gold-plated pizza.
The interim government has treated the Value Added Tax (VAT) like a magic wand, waving it over every conceivable good and service, and turning even the simplest pleasures into luxuries.
Want to eat out? Fork over 15% VAT. Thinking about buying clothes for Eid? Prepare to add 15% to your bill. Fancy some sweet treats for a festival? Double VAT on sweets ensures your sugar rush comes with a financial crash.
But the culinary realm is just the appetizer. The main course is the myriad of goods -- from tissues to medicines -- that are now garnished with inflated tariffs. A recharge of Tk100 for your mobile phone leaves you with only Tk43.70. Even fruits, the go-to diet for the sick, have been burdened with a 30% surcharge. It's as if the government decided to play Monopoly with our lives, and we’re all perpetually stuck paying rent on Boardwalk.
To truly grasp the burden, let’s break down some daily realities under this new VAT regime:
A Tk1000 restaurant bill now carries a hefty Tk150 VAT.
Out of a Tk100 recharge, Tk56.30 goes into taxes, leaving barely enough for a brief call or a few megabytes of data.
Buying a Panjabi for Tk3000 now costs Tk3450, courtesy of a 15% VAT.
VAT on local medicine has increased from 2.4% to 3%, further straining those already wrestling with rising healthcare costs.
Essential for nutrition, these now carry up to 45% surcharge, making healthy eating a luxury.
Doubling VAT from 7.5% to 15% has made traditional celebrations bittersweet.
The official narrative is that this is all part of meeting IMF’s conditions. The government’s solution to its revenue shortfall is akin to a desperate student copying answers during an exam: Quick and poorly thought out. Economists have pointed out that increasing VAT is the “easy way” to meet the tax-to-GDP ratio demanded by the IMF. Easy for whom, though? Certainly not for common people whose daily struggles are now compounded by soaring costs.
The government’s logic defies the principles of equitable taxation. Instead of broadening the tax net and targeting high-income groups or reducing tax evasion, they have chosen to squeeze the middle and lower-income populace. Taxing wealth -- such as multiple homes or luxury cars -- would’ve been a far more equitable approach. But no, why bother the elites when the masses are such easy targets?
Just when the people thought they had escaped the tyranny of one ruler (dictatorship), they’re faced with a new regime equally adept at wielding the fiscal sword. The interim government started with good intentions -- raising revenue to meet IMF conditions -- but ended up creating chaos and destruction in the process. And they seem to have a knack for making things worse for the very people they claim to be helping.
Easy for whom, though? Certainly not for common people whose daily struggles are now compounded by soaring costs
Take the example of Sirajul Islam, who reminisces about the days when a bowl of haleem cost Tk80. Now, it’s Tk130. It’s not just the cost of food that’s gone up; it’s the cost of living, dignity, and, frankly, sanity. Or consider Rokeya Begum, who laments the rising price of medicines. For a country already struggling with inflation, this VAT hike feels like pouring salt on a gaping wound.
The Dhaka Chamber of Commerce and Industry (DCCI) has rightly pointed out that these tax hikes will stifle production, increase costs, and worsen unemployment. Inflation, already a persistent nemesis, is poised to skyrocket further, leaving citizens trapped in a vicious cycle of rising costs and stagnant incomes.
Economists have been vocal about alternative solutions. Increasing direct taxes, targeting tax evaders, and reforming the tax system were all viable options. Why not ensure that the nearly 6 million Taxpayer Identification Number (TIN) holders file returns? Why not impose taxes on unproductive assets or wealth hidden in offshore accounts? Instead, the government chose to burden everyday citizens with taxes on essentials like tissues, medicines, and even fruits.
The timing couldn’t have been worse. For the first Ramadan and Eid free from dictatorship, the VAT hike feels like a cruel joke. Imagine buying fruits for iftar only to discover that oranges now cost as much as caviar. Or trying to celebrate Eid with a new Panjabi, only to realize that the VAT makes it feel more like a punishment than a purchase.
This relentless taxation strategy has dulled the joy of celebrations, turning festivals into financial planning nightmares. The government’s defense -- that these measures are necessary to stabilize the economy -- rings hollow.
Stability at what cost? The increased tariffs and VAT have eroded public trust and amplified economic inequality. Meanwhile, corruption and inefficiency within the system remain unaddressed.
Imagine a household budget where 70% of income is spent on unnecessary luxuries while children go hungry. That’s what the government’s project priorities feel like. Economists have repeatedly suggested cutting unnecessary projects and redirecting funds towards critical sectors. But the government’s penchant for ill-conceived projects, coupled with rampant corruption, has left little room for meaningful reform.
If the government genuinely wants to address revenue shortfalls, it must rethink its strategy. Start by broadening the tax base, enforcing strict anti-corruption measures, and targeting high-income groups. Reform the property tax system to ensure equitable distribution of wealth. And for heaven’s sake, stop treating VAT like a one-size-fits-all solution.
The interim government must also remember that governance is about empathy. Policies that disproportionately affect the poor while sparing the wealthy are not just unjust; they’re unsustainable. Taxing wealth instead of consumption would be a step in the right direction. It’s time to stop punishing the masses for the inefficiencies of the elite.
The interim government, once hailed as a harbinger of hope, now risks becoming a villain. By prioritizing IMF conditions over citizen welfare, they have turned the state into an adversary rather than an ally.
Bangladesh deserves better. Its people deserve a government that values their struggles and celebrates their resilience. They deserve policies that uplift, not oppress. It’s high time the interim government rewrites its script -- not as a tragic satire, but as a tale of hope and transformation.
HM Nazmul Alam, Lecturer, Department of English and Modern Languages, International University of Business, Agriculture and Technology. Email: nazmulalam.rijohn@gmail.com