{"id":33809,"date":"2017-06-05T05:33:15","date_gmt":"2017-06-05T05:33:15","guid":{"rendered":"http:\/\/en.bornomalanews.com\/?p=33809"},"modified":"2017-06-05T05:33:15","modified_gmt":"2017-06-05T05:33:15","slug":"proposed-vat-regime-may-trigger-inflation","status":"publish","type":"post","link":"https:\/\/en.bornomalanews.com\/?p=33809","title":{"rendered":"Proposed VAT regime may \u2018trigger inflation\u2019"},"content":{"rendered":"
Dhaka: Following the imposition of a uniform rate of value added tax (VAT) in the proposed budget, it is being feared that it is the middle class that would have to bear the brunt of severe inflationary pressures. According to the proposal, the consumers would have to pay VAT on their electricity bills and LP gas, and on jewellery products, local brands of readymade garments, mineral water, furniture, courier services, air-conditioned restaurants and tea. VAT has also been imposed on construction firms and motor workshops. Common people would have to pay 15 per cent on electricity bills for domestic usage. It would affect their lifestyles and also impact commodity prices.<\/p>\n
The proposal said traders would not have to pay VAT under transactions of Tk. 36 lakh every year. However, the proposal exempts the imposition of VAT on agricultural products, basic food items and house rent.<\/p>\n
Finance minister AMA Muhith maintains that the new VAT would not raise prices of goods as there will be concessions for small- and medium-sized firms. VAT exemptions would be provided to 1,042 items instead of 536 items under the currently effective VAT Act of 1991. However, many products for which VAT exemptions have been proposed are not required in daily life.<\/p>\n
In his budget speech, Muhith proposed to provide VAT exemptions on 536 primary food items like rice, lentils, fish, meat, vegetables, sugar, honey, puffed rice, maize, wheat, liquid milk, barley and salt, among others.<\/p>\n
\u201cIn addition, I propose to provide VAT exemption for 93 life-saving drugs. Public transport services, public health and medical services, and education and training services will also enjoy VAT exemption,\u201d he said.<\/p>\n
\u201cI'm also proposing VAT exemption for 404 items in agriculture, livestock and fisheries. Furthermore, non-commercial activities of charitable and cultural organisations will also enjoy exemptions,\u201d he added.<\/p>\n
As a result of these exemptions, the prices of daily essentials are expected to go down and not supposed to increase under any circumstances, he said.<\/p>\n
On Saturday, nine trade bodies\u2014led by the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI)\u2014in a joint statement also raised concerns that the new VAT proposals would affect consumers.<\/p>\n
The government, however, maintained that prices would not rise as businesses would be able to claim rebates, which were not given to products and services where multiple rates are now applied.<\/p>\n
A joint press statement by the Metropolitan Chamber of Commerce and Industry, Dhaka Chamber of Commerce and FBCCI, expressed worries that the application of a uniform 15 per cent VAT rate might hurt small and medium industries.<\/p>\n
World Bank lead economist Dr Zahid Hussain said the structure of the VAT collection system was fair and would not affect the poor. Earlier, he had said the VAT system was only being reshuffled.\u00a0 The manufacturing and construction sectors have been included in the structure of VAT, Zahid Hussain noted. However, he expressed apprehensions that if the government failed to implement the system correctly, it would affect the prices and thereby affect consumers. He said the structure of the VAT system would not affect the prices of products.<\/p>\n
On Friday, at a post-budget reaction, Dr Debapriya Bhattacharya, distinguished fellow of the Centre for Policy Dialogue (CPD), remarked that the proposed Tk. 4-trillion budget for the 2017\u201318 fiscal year, with a 7.4 per cent GDP target, would eventually increase inflation by next year. People belonging to the lower middle classes would be the worse for it, he said. He also said production costs would increase as a result of the proposed Tax Policy and Value Added Tax (VAT) Act. The rise in VAT rates might lead to inflation next year, which would mount economic pressure on people belonging to the lower middle class.<\/p>\n","protected":false},"excerpt":{"rendered":"
Dhaka: Following the imposition of a uniform rate of value added tax (VAT) in the proposed budget, it is being feared that it is the middle class that would have to bear the brunt of severe inflationary pressures. According to the proposal, the consumers would have to pay VAT on their electricity bills and LP […]<\/p>\n","protected":false},"author":7,"featured_media":33810,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[12],"tags":[],"yoast_head":"\n\n\n\n\n\n\n\n\n\n\n\n\t\n\t\n\n\n\t\n
![\"Abul-Maal-Abdul-Muhith12\"](\"http:\/\/en.bornomalanews.com\/wp-content\/uploads\/2017\/06\/Abul-Maal-Abdul-Muhith12-300x169.jpg\")
Dhaka: Following the imposition of a uniform rate of value added tax (VAT) in the proposed budget, it is being feared that it is the middle class that would have to bear the brunt of severe inflationary pressures. According to the proposal, the consumers would have to pay VAT on their electricity bills and LP gas, and on jewellery products, local brands of readymade garments, mineral water, furniture, courier services, air-conditioned restaurants and tea. VAT has also been imposed on construction firms and motor workshops. Common people would have to pay 15 per cent on electricity bills for domestic usage. It would affect their lifestyles and also impact commodity prices.<\/p>\n