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Bangladesh - May 31, 2023

Prices of products that may increase in budget

Industry Desk: The tax rate is going to be increased massively in the next budget. VAT is being increased on production of daily use items such as plastic and aluminum utensils, toilet tissue, pens, mobile phones. Besides, the import duty of food items like cashew nuts and dates is being increased to save dollars and prevent duty evasion. All in all, the people concerned think that the next budget will increase the cost of living.
The revenue target in the next budget has been set at Tk 4 lakh 30 thousand crore, which is 16 percent more than the original target of the current fiscal year. In the last 10 months (July-April), there has been a record shortfall in revenue, about Tk 34,631 crore. If the deficit at the end of the fiscal year is Tk 30,000 crore, more than 26 percent growth will have to be achieved to achieve the revenue target of the next fiscal year. To achieve this huge amount of growth, the National Board of Revenue (NBR) is moving towards raising the tax rate as well as increasing the revenue.
Every year in the budget, NBR increases and decreases the duty and VAT on goods to increase the revenue. In this, the price of those products in the market increases and decreases. To increase tax collection, the tax rates of several commodities are being increased in the budget in accordance with the conditions of the International Monetary Fund (IMF). As a result, (See Page-2)
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the prices of those products will increase due to natural reasons. Taxes on some goods are also being reduced, although the list is quite small.
If asked to know, the executive director of the private research organization Policy Research Institute (PRI). Ahsan H Mansoor said, considering the capacity of NBR, the revenue target in the next budget seems ambitious. NBR will not be able to go even close to this goal. Because qualitative changes have not been brought in the organization yet.
He further said that NBR always adopts easy tax collection method to meet revenue targets. For example, by increasing the VAT on cigarettes or by increasing the VAT on products that have VAT or by increasing the tax rate on those who pay the tax. Increasing the VAT on goods naturally increases the cost of living. NBR is not paying much attention to the growth of tax net.
In the case of household goods, all types of tableware, kitchenware, household goods made of plastic used in homes have 5 percent VAT, which is being increased to 7.50 percent. At the same rate, VAT is being increased on household goods and utensils (pots, tableware) made of aluminium. Production of kitchen towels, toilet tissue, napkin tissue, facial tissue/pocket tissue and paper towels has 5 percent VAT, which is being increased to 7.50 percent. This may increase the price of tissue paper.
Most middle-class households in cities use microwave ovens to heat food. To prevent duty evasion, the budget increases the import duty of all types of ovens by 30 percent, making the total duty 89.32 percent. This may increase the price of foreign ovens. Although VAT exemption is provided for manufacturing ovens in the country, the cost of using domestic ovens will be reduced in the future. Besides, LP gas cylinders are widely used for cooking purposes all over the country. The budget is imposing duty on imports of steel and welding wire used in manufacturing cylinders and raising VAT at the manufacturing stage. This may increase the price of cylinders in the market.
Many people like to eat Biryani and Tehari on weekends or festivals. Eating this hobby food will also cost extra. Because VAT is being imposed on the import of basmati rice, the main ingredient of biryani-tehari. This may increase the price of rice. Many people eat almonds and dates for good health. The budget imposes a 25 percent duty on imports of fresh and dry dates along with 15 percent VAT. Basically this step is being taken to prevent customs evasion. The import duty on cashew nuts is being increased from 15 percent to 43 percent to encourage nut cultivation in the country. Hence the price of imported cashew nuts may increase. Besides, the import duty of various types of fruits and nuts is being increased, so the price of fruits and nuts may increase.
If you are in the habit of smoking, it is better to avoid it. All types of cigarettes are being hiked in the budget. A pack of low-end (20-pack) cigarettes (Hollywood, Derby) is priced at Tk 90, mid-range (Star, Navy) at Tk 134, high-end (Goldleaf) at Tk 226 and ultra-high-end (Benson, Malboro) at Tk 300. Besides, the price of jorda-gul (tobacco powder) is also being increased. Bidee prices will remain unchanged.
Changing mobile phones every year is part of fashion, which has become a hobby. In order to raise revenue, the budget is considering VAT on mobile phones as a luxury item on the advice of the IMF. Currently, mobile phone manufacturing is exempt from VAT, where 2 percent VAT is levied. And at the addition stage, VAT is being increased from 3 percent to 5 percent and from 5 percent to 7.50 percent. Due to this, the price of mobile phones may increase at the retail level.
Besides, the cost of buying pen for the child will also increase. Production of pens is currently VAT exempt, with 15 per cent VAT being levied. This may increase the price of the pen. Import duty on spectacle frames and sunglasses is being increased from 5 percent to 25 percent. Besides, VAT is being increased from 5 percent to 7.5 percent at the production stage. Duty is increasing on import of bicycle parts. Duty is also being increased on the import of Sirish paper. Preservative duty on glue for fixing broken items is increasing.
The upcoming budget will increase the cost of building houses. The import duty of clinker, the main raw material for building houses, currently has a duty of Tk 500 per ton, which is being increased to Tk 700. Due to this, the price of cement may increase. Subsidy facility on import of foreign tiles used in houses is being withdrawn. Due to this, the price of foreign tiles may increase.
However, the list of commas is very short. The price of sweets may come down. Because VAT on sweets is being reduced from 15 percent to 7 and a half percent. Besides, VAT is being reduced on some other products.
On the other hand, the budget has plans to bring low-income people into the fold by giving concessions to the rich. Because the return can be submitted earlier showing zero income (annual income below the taxable limit), but to get the slip (receipt certificate) in the next day, a minimum tax of Tk 2,000 has to be paid. And if the return deposit slip is not taken, savings bonds can’t be bought and bank loans can be taken. Business trade license, vehicle fitness renewal, gas-electricity connection, house design approval including 44 public and private services will not be available.

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