BNP terms 15pc VAT unjustified
The proposed 15 percent uniform VAT is the ruling party's tool for “political exploitation” before the next parliamentary election scheduled to be held late next year, according to BNP leaders.
Terming the move “unethical and unjustified”, they said it would directly impact the living standard of the people, especially those in the lower income group.
Under the existing VAT Act 1991, the government collects indirect tax at varying rates, ranging from 1.5 percent to 15 percent, on a number of goods and services.
VAT is now the biggest source of revenue for the government, followed by income tax and import duty.
“The government has made such a decision keeping in mind the next election. The money will go into the pockets of the ruling party men through corruption. It is a kind of political exploitation of the citizens,” Amir Khasru Mahmud Chowdhury, party's standing committee member, told The Daily Star yesterday.
He claimed that the economic model the government was following was not citizen-friendly.
“They have made the decision of 15 percent flat VAT probably because the real economy is not doing well.”
“According to the government statistics, people's purchasing capacity has decreased in the last few years and if they have to pay VAT [at 15 percent], this will further reduce their purchasing capacity. It will impact their living standard,” Amir Khasru said.
Abdul Moyeen Khan, party's standing committee member, said, “In spite of big claims by the government in respect of massive increase in revenue collections, the fact remains that the proposed imposition of 15 percent VAT across the board has created a strong resentment amongst the low income and small business groups in the country.”
“No wonder the government is left with any other choice but to repress the poor through such high 15 percent VAT on everything in order to cover up for several fold increase in revenue expenditure,” he added.
BNP Vice-Chairman Major (Rtd) Hafizuddin Ahmed claimed the decision was illogical and that it contradicted the basic principles of making a budget.
“This will create barrier to businessmen and ultimately people have to suffer for it,” he said, adding, “If the government can bring discipline in the economic sector by removing corruption in financial institutions and banking sector, it would be good for the country.”
Abdul Awal Mintoo, adviser to BNP Chairperson Khaleda Zia, said the rate was too high and would create chaos in some sectors and people would have to suffer if the new VAT rate was implemented.
“Yes, the BNP is in favour of VAT and the expansion of VAT coverage. But 15 percent VAT for all sectors is irrational and illogical as it would create a financial burden on the people,” he said.
The former president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) said the government was making false and confusing statements over budget size, its implementation and the overall economic sector.
Party insiders said the BNP would give a formal reaction on the overall budget issue after the government placed the budget. The party was keeping an eye on the issue and preparing documents in this regard.