The non-government organisations said the Vat and Supplementary Duty Act 2012 may increase poverty and hinder the growth of small and medium enterprises.
They urged the government to reconsider “prescriptions” made by the International Monetary Fund (IMF) on the new VAT law before it came into effect.
A number of 23 NGOs made the call from a human chain formed in front of the National Press Club in the city yesterday.
The NGOs are Arpan, Oline Knowledge Society, COAST Trust, EquityBd, Udayan Bangladesh, Bangladesh Labour Federation, SDO, Coastal Development Partnership, Kishani Sobha, DOCAP, National Labour Alliance, Nature Campaign Bangladesh, Prantojon, BAFLF, Bangladesh Krishak Federation, Voice, Labour Resource Centre, Sirajganj Flood Forum, Sangram, Synergy Institute and Humanity Watch.
The government is set to implement the new Vat and Supplementary Duty Act-2012 from July 1, 2016 that will have no provisions for package VAT or truncated value-based VAT system. With the introduction of the law, all level of business has to pay a unique and a single VAT rate at 15%.
EquityBD Coordinator (Tax Justice Network) Ahsanul Karim alleged that the government finalised the VAT law in 2012 in line with the IMF prescriptions.
“This law proposes 15% flat rate which will result in price hike of daily essentials. IMF does not make this type of prescription for the welfare of the countries like Bangladesh; rather the intention of such prescriptions is to serve the interest of multinational companies,” he said.
“Currently, 80% of the entrepreneurs are from SME sector, among which, a major portion are rural SMEs. It is very tough for them to obtain VAT rebate for many reasons creating financial losses for them. The government should introduce reduced VAT rate for the SMEs so they can benefit from the law,” said Ahsanul Karim.
He said the price of commodities like oil, pulse, rice will increase as there will be 15% Vat rate applicable on the products, having a negative impact on poverty rate.
Badrul Alam of Bangladesh Krishak Federation thinks the new VAT law will create burden on the farmers.
He said the government should focus on collection of direct tax from multinational companies than inflicting a new burden on the poor.
Sanat Kumar Bhowmik of COAST Trust said contribution of direct tax in Bangladesh is lower than other developing countries. In India direct tax is 35% of total revenue collection, in Sri Lanka 38% and in rich countries about 70%.
Mustafa Kamal Akanda of EquityBD, Subal Sarkar of Bangladesh Bhumiheen Samity, Sanat K Bhowmik of COAST Trust and Zayed Iqbal Khan of Bangladesh Krishak Federation also spoke on the occasion.
Addressing the programme, they said 70% share of the total revenue is generated from the poor people as Vat while only 30% are collected from big multinational firms as income tax.
VAT is regressive for poor, they said urging the government to develop its dependency on direct tax.
The other demands include no-expansion of Vat on essentials, formation of separate tax unit, reduction of non-development expenditures and strict actions against black money.
