The proposed budget for this fiscal year looks to impose an increased value added tax and an advance income tax on handset imports.
For a country that depends solely on the import of mobile phones, increased taxes on the product will cripple many businesses which rely heavily on mobile phone relay to operate, especially those based in the more remote corners of Bangladesh. Such entities often lack access to other infrastructure, and hence, are totally reliant on their mobile phones for business.
According to the proposed budget, value added tax (Vat) for imported handsets will be increased to 15%, alongside an imposed 5% advance income tax (AIT). This reduces the affordability of the product for Bangladesh’s lower income demographic, as well as potentially giving smugglers a new avenue to pursue.
Staggering 95% of all handsets were imported illegally in 2001-02. The number of illegal imports is now a barely noticeable fraction of that. Higher taxes carry with them the risk of tipping these numbers back in favour of illegal trade.
It is fair to say then, that this will have a direct, negative impact on our country’s economy. Increased taxes on the import of mobile phones and on SIM cards are a bad idea. They directly contradict the incumbent government’s vision of a “digital Bangladesh.”
The potentially negative repercussions these taxes will bring forth on our economy outweigh any of the short-term gains that the finance ministry hopes to achieve out of them.
