New VAT law to shoot up essential prices

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Pns: Consumers will be affected by soaring prices of essentials due to the 15 percent uniform VAT on all products and services under the new value-added tax (VAT) law that will come into effect from July 1.



Consumers and businesses fear that implementation of the new VAT law will push up the cost of living.



They said after the implementation of new law, there will be no tariff facilities for around 30 products. Price of products like rod, milk powder, and hand-made biscuits would rise for the increased VAT rate.
Prices of products like electricity and bread will also shoot up.



People will have to spend more on some products and services those are now subject to different VAT rates based on truncated value. Under the truncated value-based VAT rate, the VAT on electricity is 5 percent, transportation sector 10 percent, motor garage 10 percent, furniture 4 percent. All these sectors will be subject to 15 percent uniform VAT once the new VAT law comes into effect.



Arman Ahmed, a banker, said discussions on the new VAT law are currently focused on the impacts on traders or producers.



“But, the reality is, consumers will be the ultimate sufferers. People will ultimately have to pay the VAT. The government should foresee the impacts on the consumers and take steps accordingly,” he said.



Jannatul Akter, a consumer, said the government will provide rebate to the manufacturers on raw materials, but it would hardly bring something positive for the consumers.



“It would better to fix a viable VAT rate considering the per-capita income,” she added.



Common people and sector insiders also said in addition to price hike, the new VAT law would also push the inflation up by at least 1.5 percent.



Ghulam Rahman, president of Consumers Association of Bangladesh (CAB), said it is the consumers who ultimately pay VAT. Businesses would get their rebate under the new law. So the government should prioritise the interest of the consumer so that they don’t have to pay extra.”



He also suggested the government to incorporate consumer-friendly provisions in the new VAT law and to exempt essential products from the uniform VAT system.



Abu Motaleb, general secretary of business unity forum, said the government is going to implement new law without full preparation and training for traders.



“Prices will definitely go up for the new VAT rate,” he said.



Amid a wide range of criticism and opposition from business people, the Value Added Tax (VAT) Act 2012 will be effective from July 1 at a flat rate of 15 percent.



However, in a written explanation, National Board of Revenue (NBR) said that there is no chance of price hike and inflation.



As per the new law, manufacturers will get rebate on VAT. Since it would reduce production cost, they will not hike the price of products, it said.

PNS/Tamanna Khan

 

@PNSNews24.com

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