Bane, boon for consumers
This year's budget brings some good news for people struggling to cope with their healthcare expenditures.
Finance Minister AMA Muhith has proposed a reduction of customs duties on 40 basic raw materials, used to manufacture medicines, to a 5 percent concessionary rate from the existing 10 percent and 25 percent.
The proposal, if adopted, will lead to a substantial decrease in the prices of locally manufactured medicines.
Other existing concessionary rates applied to the sector will remain as they are.
The customs duties on 14 items used to produce anti-cancer drugs and medicines have been fully exempted.
Likewise, import duties on infusion pumps used in the treatment of thalassemia have been withdrawn.
The budget also proposes lifting VAT (value added tax) on dialysis solution at the local production stage in order to help patients avail the expensive treatment.
Besides, especially capable and mentally challenged people will be able to receive medication services free of VAT, it says.
Muhith also wants to withdraw VAT on contraceptives at retail level to keep the price within the capacity of the common people.
The existing 10 to 25 percent duties on 41 essential raw materials of ayurvedic medicines are proposed to be reduced to 5 percent.
Hard-pressed consumers are expected to find some comfort in paying less for some food and non-food items as the budget proposes significant cuts in supplementary duties (SD).
Muhith has this time recommended a reduction of SDs on fish, frozen fish, frozen shrimps, tomatoes, chocolates, sweet biscuits, potato chips, ice cream, perfumes, cosmetics, soap, detergents, mosquito coil, aerosol and mosquito repellents, silk fabrics, woven fabrics, track suits, brassieres, handkerchiefs, shawls, scarves, mufflers, mantillas, veils, ties, bow ties and cravats and gloves, imitation jewellery and tooth brushes.
The prices of edible oil may remain unchanged in the local market, as the minister has proposed continuing with the VAT concession on crude and refined palm, soybean and sunflower oil at the import stage until June next year. The concession was due to expire on June 30.
Locally produced diapers will also become cheaper.
The finance minister also proposed the withdrawal of the 15 percent supplementary duty on locally produced filament bulbs to encourage their use.
Duties on multiplexer and grand master clocks used in high-speed internet connection will go down, as the budget has proposed decreasing the existing 25 percent customs duty to 5 percent.
People owning saving certificates and wage earners bonds worth up to Tk 5 lakh will not have to pay taxes on their interest incomes.
At present, savers with tax identification number pay 10 percent tax at source on their interest incomes, while those without TIN pay 15 percent tax.
Muhith has also planned to introduce some changes that may not be in favour of end consumers.
For example, the prices of mobile phones, which are not assembled locally, will go up since he has proposed imposing 15 percent VAT on them at the import stage, which is 10 percent now.
The budget proposes levying Tk 100 on a piece of replacement SIM (subscriber identity module) card.
The price of gold will also go up as the minister proposes to allow passengers to bring 100 grams of gold ornaments free of taxes under the Passenger Baggage Rules. Now a passenger can bring up to 200 grams (about 17 tolas) of gold ornaments duty-free.
Another 200 grams of gold bars are allowed on payment of Tk 150 specific duty for each tola. Muhith put forward a proposal in the budget to increase this duty to Tk 3,000 for each tola of bullion.
In a victory for anti-tobacco campaigners, the prices of all imported and locally produced tobacco products are set to increase as the minister has proposed imposing 1 percent “Health Development Surcharge”.
Apart from that, medium to low range cigarettes will be costlier by two to four percentage points.
However, no tax rise has been suggested regarding high-end cigarettes.
As per the budget, the prices of 25 sticks of non-filtered bidis will be Tk 6.14 from Tk 5.35 and 20 sticks filtered bidis will be Tk 6.94 from Tk 6.05.
The finance minister proposed to double the existing 30 percent supplementary duty on Jarda and Gul.
He suggested unifying the existing two slabs of 1,501cc to 1,750cc and 1,751cc to 2,000cc motor cars into one slab of 1,501cc to 2,000cc, and proposed 100 percent SD on them along with other duties and taxes unchanged.
Likewise, the existing 250 percent SD on motor cars having capacity between 2,001cc and 2,750cc will be reduced to 200 percent, according to a proposal, decreasing their end prices.
The prices of microbuses and double cabin pickups are expected to go up, as the minister plans to increase SDs on them to discourage import.
He proposed cancelling the truncated base value system on air-conditioned launch, bus and railway services, and instead impose the standard 15 percent VAT.
The VAT on motor garage, workshop, dockyard, photo lab, English medium school, immigration consulting service and transport contractors (except petroleum products carrying contractor) will go up to 7.5 percent from the existing 4.5 percent.
The budget also proposes to increase VAT on land development and building construction and jewellery services from 1.5 percent and 2 percent to 3 percent.
Eating out will be costlier, as Muhith has proposed raising VAT to 7.5 percent from the existing 6 percent on restaurant service (not air-conditioned).