FBCCI's Anti-Discrimination Reform Council calls on govt to revoke VAT hike

The Anti-Discrimination Reform Council of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) has demanded the government withdraw its decision to increase VAT and supplementary duties (SD) on nearly 100 products.

They made the demand during a press conference held at the Abdus Salam Hall of the National Press Club today (14 January).

At the briefing, the FBCCI body protested the irregular increases in value-added tax (VAT) and supplementary duties on goods and services, as well as the proposed hike in gas prices.

In a written statement, the council Convener Zakir Hossain Nayan said, "The council demands the government to immediately withdraw this suicidal decision' and bring peace to the people's lives, because this suicidal decision is against the spirit of the July Revolution."

The government can do this through proper application of financial management, he said, adding that through which it will be possible to keep the prices of goods stable and bring inflation under control.

Mentioning that Bangladesh is currently going through a difficult economic phase, he said, "In the meantime, we have noticed concerns over the government publishing a gazette notification on 9 January, increasing the value-added tax (VAT) and supplementary duty on more than a hundred goods and services in the middle of the current 2024-2025 fiscal year.

"We, the business community, express deep concern over the increase in VAT and supplementary duty without consulting the stakeholders."

He further stated that the government has also taken initiatives to increase the price of gas.

"This sudden imposition of taxes and the proposal to increase the price of gas will have a huge negative impact on the overall national economy of the country," he added.

Zakir Hossain noted that at a time when the government, the business community, and others are making every effort to bring the country's economic activities to normal, the proposal to increase the price of gas along with increasing the VAT and supplementary duty at an abnormal rate will hinder the momentum of the nation's economic progress.

The government has implemented a regressive tax policy, despite previously advocating for progressive taxation, to fulfill the International Monetary Fund's (IMF) requirement of raising an additional Tk12,270 crore in revenue.

In a progressive tax system, individuals with higher incomes bear a larger tax burden, reducing income inequality by requiring wealthier individuals to contribute more. Conversely, regressive taxes impose a disproportionate burden on lower-income earners, as they pay a higher percentage of their income compared to the wealthy.

Instead of curbing tax evasion or increasing direct taxes, the government has broadly increased VAT and supplementary duties (SD) on nearly 100 products and services, which will heavily impact lower-income and general consumers

According to the National Board of Revenue (NBR), 63% of the Tk4.80 lakh crore revenue target for the current fiscal year will be collected through indirect taxes such as Value Added Tax (VAT) and various import duties. Nearly 10 years ago, the share of indirect taxes was 65%.