Common people will be affected if the government imposes 15 percent VAT on all products and services under the new value-added tax (VAT) law that will come into effect from July 1, experts have said.
People may see another round of hike in gas and electricity prices when the new VAT law comes into effect, they observed.
Though the VAT rates currently vary depending on products, the new VAT law will enforce a unified VAT rate of 15 percent on all products and services, which experts said will be ultimately shouldered by the consumers.
Businesses also are not happy with the new VAT law and have been negotiating with the government for long to find an alternative to the unified VAT rate.
Terming it as suicidal, they said without the consensus of the business community, the decision of implementing the new VAT law will not do any good.
Instead of the 15 percent uniform VAT rate, they still are demanding the multi ceiling VAT rates for different sectors. Business leaders demanded 10 percent VAT rate for manufacturing sector while 7 percent for the service sector.
“If the new VAT law comes into force, 15 percent VAT will be added to gas and electricity prices. It may push up the utility prices further,” said CPD Research Fellow Towfiqul Islam Khan.
He suggested the government imposes VAT on gas and electricity in phases.
Dr Wahiduddin Mahmud, Professor of the department of economics at Dhaka University, said the provision of imposing 15 percent VAT on gas and electricity is not logical.
After a meeting at the secretariat on Monday, Finance Minister AMA Muhith said there is no alternative to implementing the new VAT law from July 1 with the 15 percent VAT rate.
At another meeting a few days back, the finance minister noted that NBR had some weaknesses in negotiating with businessmen regarding the new VAT law.
“The businessmen have agreed on new VAT law at a meeting with the NBR. But minutes later they changed their stance. This reflects the shortcomings of NBR in implementing the new law,” Muhith said, adding “This weakness should be removed.”
FBCCI first senior vice-president Md Shafiul Islam Mohiuddin said the standard VAT rate is 10 percent in Laos, Cambodia, Vietnam, Afghanistan, Indonesia and Myanmar.
The FBCCI leader also said there should be no VAT on any stage of business if their annual turnover is Tk 36 lakh.
With the implementation of new VAT law passed in 2012, the existing square foot-based package VAT would be abolished.
After several deferrals on the implementation date, the government is now planning to implement the new act from July 1, 2017. The Parliament passed the law in 2012.