TDS Desk:

The interim government has decided to hike VAT rates in the middle of the fiscal year to bolster revenue earnings and satisfy IMF bailout conditions.

However, the planned hike on 43 goods and services will yield little revenue, and therefore, policymakers should instead opt for expanding the VAT net, stakeholders think.

Instead of hiking VAT rates, the industry owners have also called for recovering illegal assets from money launderers, covetous businessmen and corrupt government officials for boosting state coffers.

The have asked the Prof Yunus-led government to bring to book the “looters” of people’s money, and removing pro-Awami League employees from government offices.

Since the formation of the post-fascist interim government on 8 August, people have suffered a series of internal security setbacks, ranging from arbitrary street protests to daring criminal raids by teenagers, and added to the crisis is a political uncertainty.

Mostly due to the shaky law and order situation, private sector investment and job growth have nearly stalled. In this backdrop, VAT hikes would discourage consumer spending on high-end restaurants, classy tourism services, and branded clothes.

Imran Hasan, secretary general of the Bangladesh Restaurant Owners Association, has told the Bangla daily Bangladesh Pratidin that the restaurant sector would face more pressure due to the VAT hike on high-end services.

Other business owners in the tourism and hospitality sector agree that the ongoing crisis in their businesses would be prolonged once the VAT hike is enacted. They also claimed that the proposed 15% Vat is not applied in “any other country of the world,” saying the existing 5%-7% VAT on the luxury sector is already more than enough.

They suggested the government should rather expand the VAT payers’ net to include a big share of the 70% common people still living outside the VAT base.

They have blamed the pro-Awami League bureaucrats in the interim government for apparently forcing the government to adopt plans detrimental to their business and even the wider economy.