Prices of some items such as sugar and edible oil may go up due to a spike in customs tariff and imposition of VAT for the fiscal 2019-20, Mosharraf Hossain Bhuiyan, chairman of the National Board of Revenue, said yesterday.
“We have calculated that prices of sugar will increase by Tk 5 each kilogram,” he said at a seminar on “Salient features of Finance Bill 2019” organised by the Institute of Chartered Accountants of Bangladesh (ICAB) at its office in the capital.
Prices of soybean oil may raise by 2 to 3 percent for VAT measures, he said, but added that the NBR tried its best to levy VAT in a way that prices of goods and services did not increase too much.
“But we will watch. We will catch them [businesses] if they increase prices too much,” he said.
His remarks came as businesses have hiked prices of sugar just after the NBR increased specific duty and regulatory duty on both refined and raw sugar for the fiscal 2019-20.
Soon after the proposed budget, traders increased prices of sugar. Prices of sugar rose by Tk 120 per maund to Tk 1,830 per maund in Khatunganj-Chaktai market, the hub for wholesale commodities in Chattogram, on Saturday.
Mosharraf said duty on sugar was hiked taking into consideration its low prices in the domestic and international markets. Locally, sugar is being traded at Tk 45 a kg at wholesale and Tk 50 a kg in loose form.
Packaged sugar prices stand at Tk 55 to 60 a kg, he said, adding that a family might require one kg of sugar in one or two weeks.
“Why cannot I spend Tk 60 or Tk 70 for two weeks?” he asked and said residents in Dhaka city usually buy one kg of vegetables at Tk 60 to 70 and there would be a very few vegetables priced below Tk 40 a kg.
From that perspective, a Tk 5 increase in sugar price would not hurt consumers too much, he said.
To keep impact on prices low, he said the NBR slapped specific amount of VAT on rod instead of imposing reduced rate.
“Prices of the construction ingredient would have increased too high had we imposed 5 percent VAT. We have also kept special rates for petroleum and medicine. If needed, we will revise rates of a couple of more items,” he said.
The NBR chairman said concerns have been raised from various quarters regarding spiral in prices of goods and services as rebate benefit for VAT rates less than 15 percent is being offered.
He added that it was said that VAT had turned into an excise in the absence of rebate benefit.
“What is wrong if we can relieve people by introducing four rates and at the same time increase revenue collection,” he said.
ICAB President AF Nesaruddin said automation of VAT system was the key to this new law implementation.
He said a provision has been included in the new VAT law that a chartered accountant would be required to get a licence from the revenue authority to be a VAT practitioner. This provision was not in the VAT Act 1991, he said, demanding the government reinstate the provision.