BNP suggests cutting govt expenses instead of increasing VAT
“We believe that if the government reconsiders its development budget and removes unnecessary and financially unfeasible projects, about 20% of spending can be reduced, which could save nearly Tk60,000 crore," says Mirza Fakhrul Islam Alamgir
The BNP has urged the interim government to focus on increasing direct taxes instead of raising indirect taxes, demanding the withdrawal of its "imprudent" decision to impose value-added tax (VAT) and supplementary duties on over a hundred products, citing public suffering.
Indirect taxes affect people across all income groups almost equally and place an additional burden on the lower-income population, BNP Secretary General Mirza Fakhrul Islam Alamgir stated at a press conference today (18 January).
He added that the ongoing financial crisis can be resolved without increasing direct taxes by reducing government spending and reorganising the economic management of the current budget.
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"We call for immediate withdrawal of the irresponsible decision of imposing taxes and VAT or indirect taxes on the common people," he further said at the press conference held at the BNP chairperson's office in Gulshan.
Fakhrul said, "We urge the government to prioritise the public's needs when formulating policies. Given the current economic reality of the country, there are alternative ways to increase revenue, and there is room for action accordingly."
Fakhrul emphasised that the government should first focus on cutting expenses in the current situation. "We believe that if the government reconsiders its development budget and removes unnecessary and financially unfeasible projects, about 20% of spending can be reduced, which could save nearly Tk60,000 crore."
He further suggested that if the government reduces expenditures in local government budgets and subsidies and manages to cut operational costs by 10%, it could save at least Tk50,000 crore overall.
At the press conference, the BNP presented several proposals to improve the country's economic situation, including the following:
• In the area of direct taxes, the government could focus on increasing the income tax rate in the highest bracket, as well as raising surcharges and wealth taxes to improve tax collection. Attention should also be given to increasing income in non-tax and non-revenue sectors. Rather than increasing the VAT rate, the scope of VAT could be expanded.
• The government could take effective steps to ensure TIN holders submit returns and facilitate tax collection. This would help expand the income tax base and improve the efficiency of tax collection.
• Bringing taxable income under the tax net would be a crucial step for the government. This would help prevent tax evasion and increase revenue, while also making the tax system more transparent and structured. Such measures would contribute to maintaining economic stability and increasing government revenue.
• The government could take effective action by using seized or frozen assets of corrupt individuals in a lawful manner. Additionally, identifying and ensuring the proper legal use of unused and surplus funds in various government sectors could be another step towards better financial management.
• A focused effort on recovering black money, looted funds from banks, and non-performing loans is crucial. According to the current government's white paper, it is urgent to make maximum efforts to recover about $234 billion dollars lost due to corruption and misappropriation.
• The government could request the IMF to ease the tough conditions attached to their loan. It is being claimed that taxes have been imposed to meet the IMF's conditions.
• During the corrupt rule of the Awami League, many powerful individuals and institutions were unjustly given tax exemptions. Many of them chose this unlawful path and evaded taxes through unethical means. The interim government could close these avenues of injustice and financial irregularities while focusing on increasing direct taxes.
• The previous government gave immoral privileges to large loan defaulters, increasing the burden of bad loans. By paying only 2% in cash, large defaulters were cleared of their loan default status. The government should compel these loan defaulters and oligarchs to pay back their outstanding loans and return the money that was illicitly transferred abroad.
• Revenue can be increased by curbing tax evasion and improving tax administration. Statistics show that due to tax evasion in various sectors, the government loses nearly Tk56,000 crore to Tk3 lakh crore annually. Using various types of information technology can help prevent tax evasion. In short, to reduce corruption and harassment in tax administration, automation in the National Board of Revenue's (NBR) audits must be ensured.
• With the current structure of the NBR, internal revenue growth is not possible, and over the last 15 years, the fascist looter groups and their oligarchic allies have collected revenue from the general public through indirect taxes, while the wealthy paid less income tax. Corrupt individuals, such as Matiur of the "Goat Scandal" have played a direct and indirect accomplice role in this. As a result, extreme economic inequality has grown in society.
• One of the key sources of the economy, agriculture, must be given more focus. In daily agricultural production, particularly vegetable farming, every available piece of land, from courtyards to abandoned plots, must be used.
