Agro processors issue 7-day ultimatum for VAT withdrawal

The Bangladesh Agro-Processors' Association (BAPA) has given the government a seven-day ultimatum to withdraw the increased value added tax (VAT) and taxes on agro-processed food products and to halt the proposed gas price hike.

If the government fails to comply with their demands within this period, the agro processors have decided to suspend factory production activities and organise a peaceful rally in front of the Secretariat in the capital.

At a press conference held at Dhaka Club today (16 January), BAPA President MA Hashem said imposing higher VAT and taxes on processed food products would disproportionately harm labourers, marginal farmers, and low-income groups. 

He added that essential food items such as biscuits, cakes, and juices could become unaffordable for many, leading to a decline in demand and potential factory closures.

"The increase in VAT will push basic food items beyond the purchasing power of consumers, potentially shutting down many factories and putting approximately 250,000 workers at risk of losing their jobs," Hashem said.

He further said a gas price hike would exacerbate the crisis by raising production costs, making Bangladeshi exports less competitive in global markets. 

This, he noted, could lead to a loss of vital export markets and a significant blow to the national economy.

Impact on marginal farmers, consumers

Ahsan Khan Chowdhury, chairman and CEO of PRAN-RFL Group, emphasised the distressing impact on marginal farmers and consumers. 

"We process agricultural products such as mangoes, tomatoes, pineapples, and bananas sourced from marginal farmers. If the prices of these products increase due to higher VAT and gas prices, consumers will stop buying them, leaving farmers and workers in dire straits," he said.

He urged the government to revoke the increased VAT and reconsider the gas price hike, highlighting the cascading effects on farmers, factory workers, and low-income individuals.

At the event, BAPA officials said these measures would disrupt the affordability of staple items. 

"For many low-income individuals, a cup of tea with a biscuit or cake is a daily routine. With increased VAT and gas prices, even a Tk5 biscuit will become unviable, leaving many struggling people to meet basic nutritional needs," Hashem added.

On 9 January, the VAT department of the National Board of Revenue raised the VAT and supplementary duty on over 100 goods and services. Key changes include: VAT on machine-made biscuits, cakes, pickles, chutneys, ketchup, and fruit pulp increased from 5% to 15%; supplementary duty on fruit juices and drinks rose from 10% to 15%; and non-carbonated drinks, previously exempt from supplementary duty, now incur a 15% charge.

The association announced plans to seek a direct meeting with the chief adviser of the interim government to discuss the potential consequences of these policies. 

They expressed hope that a dialogue would lead to a favourable resolution.

Iqtadul Hoque, general secretary of BAPA; FH Ansaery, president of ACI Agri Business; Sayef Nasir, managing director of SMC Enterprise; Md Shafiqur Rahman Bhuiyan, president of the Bangladesh Auto Biscuits & Bread Manufacturers Association; along with senior officials from Akij Foods, Square Food and Beverage, and Kishwan Group, were present, among others.