Imposition of value added tax (VAT) on essential commodities has compelled the middle income and poor groups to count extra since many of them have lost their jobs and other means of income due to the Covid-19 pandemic. The prices of a number of commodities, including rice, pulse and edible oil, have already increased in the market, hurting the common consumers.
According to economists and consumer bodies, the country’s budget is largely dependent on value added tax (VAT) that directly affects the lower income group of people. They said the government is increasing the purview of this indirect tax instead of taking steps to build capacity of revenue officials to increase direct tax collection. The rich and the poor buy products at the same price and have to pay the same amount of VAT.
So, the essential items must be kept out of the VAT burden. Like rice other essential items should be exempted. The government has to curtail their ostensibly rich lifestyle through corruption so that we can all live together well and happy.
Mentionable that Consumers Association of Bangladesh (CAB) and different market monitoring bodies have been demanding the government to keep all daily essential commodities out of the purview of the VAT for the sake of poor people. They hoped that steps would be taken so that consumers do not have to pay additional prices.
It is to be noted that the government has set a Tk 3.30-trillion revenue collection target for the National Board of Revenue (NBR) for the fiscal year 2020-2021. The target for value added tax (VAT) collection has been set at Tk 1.28 trillion, followed by income tax at Tk 1.05 trillion and Customs Duty at Tk 956.52 billion.
The burden of VAT is regressive because lower-income households spend a greater share of their income on consumption than higher-income households do. Even by a lifetime income measure, the burden of the VAT as a share of income is lower for high-income households than for other households. Since VAT is essentially a consumption tax in the end, one can easily see that poor people end up paying much more VAT as a share of their income than do rich people
We hope the NBR will take the necessary steps to relax VAT on daily essentials considering the current pandemic situation. If there are legal barriers in this regard, these should be resolved by the NBR itself.
According to economists and consumer bodies, the country’s budget is largely dependent on value added tax (VAT) that directly affects the lower income group of people. They said the government is increasing the purview of this indirect tax instead of taking steps to build capacity of revenue officials to increase direct tax collection. The rich and the poor buy products at the same price and have to pay the same amount of VAT.
So, the essential items must be kept out of the VAT burden. Like rice other essential items should be exempted. The government has to curtail their ostensibly rich lifestyle through corruption so that we can all live together well and happy.
Mentionable that Consumers Association of Bangladesh (CAB) and different market monitoring bodies have been demanding the government to keep all daily essential commodities out of the purview of the VAT for the sake of poor people. They hoped that steps would be taken so that consumers do not have to pay additional prices.
It is to be noted that the government has set a Tk 3.30-trillion revenue collection target for the National Board of Revenue (NBR) for the fiscal year 2020-2021. The target for value added tax (VAT) collection has been set at Tk 1.28 trillion, followed by income tax at Tk 1.05 trillion and Customs Duty at Tk 956.52 billion.
The burden of VAT is regressive because lower-income households spend a greater share of their income on consumption than higher-income households do. Even by a lifetime income measure, the burden of the VAT as a share of income is lower for high-income households than for other households. Since VAT is essentially a consumption tax in the end, one can easily see that poor people end up paying much more VAT as a share of their income than do rich people
We hope the NBR will take the necessary steps to relax VAT on daily essentials considering the current pandemic situation. If there are legal barriers in this regard, these should be resolved by the NBR itself.
