Finance Adviser Salehuddin Ahmed has said despite an increase in VAT (Value Added Tax) in various sectors, the prices of essential goods are unlikely to be affected.
He said: “Duties on all essential goods have been reduced to zero. You will notice the benefit of this concession.”
The advisor made this remark at the Secretariat on Thursday, in response to journalists' queries about the government's move to raise taxes on various goods and services.
On Wednesday, the interim government's Advisory Council approved a policy decision to increase VAT on 43 goods and services, alongside raising supplementary and excise duties on some other items.
Regarding the impact on inflation, he said: “The main indicators of our inflation basket are items like rice and lentils. The goods on which taxes are being raised have minimal significance in driving inflation.”
Salehuddin Ahmed also said that VAT is being raised for restaurants rated three stars and above, not for regular or everyday eateries.
Regarding the increase in airfares, he explained: “For domestic air travel, the previous tax was Tk500, which is being increased by Tk200. People who travel by domestic flights can likely afford an additional 200 taka. These are marginal changes.”
The adviser further said: “In no country in the world, not even in Nepal or Bhutan, are taxes as low as in Bangladesh. For essential items, we’ve always aimed to bring taxes down to nearly zero.”
When asked why such decisions are being made within five months of the interim government's term, Salehuddin Ahmed said, “The reason for this is the concessions we’ve offered, which amount to several thousand crores of taka. With our significant revenue shortfall, we cannot proceed with large-scale deficit financing.”
