Cancellation of new VAT law is demanded to protect the poor and SME

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index_77Dhaka, 25th April 2015. Today from a human chain 23 right based civil society organizations urge the government to reconsider IMF prescriptions on VAT law. They also demanded cancellation of new VAT law which proposes 15% flat rate for all good and commodities. They think, this new law will increase poverty and it will create hindrances towards the development of small and medium entrepreneurships in the country.

The human chain was organized in front of the National Press Club by Arpan, Oline knowledge society, COAST Trust, EquityBd, Udayan Bangladesh, Bangladesh Labour Federation, SDO, Coastal Development Partnership, Kishani Sobha, DOCAP, National Labour Alliance, Nature Campaign Bangladesh, Prantojon, BAFLF, Bangladesh Krishak Federation, Voice, labour Resource Centre, Sirajgonj Flood Forum, Sangram, Synergy Institute and Humanity Watch.

The human chain was moderated by Mustafa Kamal Akanda of EquityBD while Ahsanul Karim from the same organization presented the key note on behalf of the organizers. Among others Badrul Alam of Bangladesh Krishak Federation, Subal Sarkar of Bangladesh Bhumihin Somity, Sanat K Bhowmik of COAST Trust and Zayed Iqbal Khan of Bangladesh Krishak Federation also spoke on the occasion.

Ahsanul Karim said, Bangladesh government finalized the VAT law in 2012 according to IMF prescription which is supposed to be effective from financial year of 2015-2016. This law proposes 15% flat rate which will result prices hikes of various essentials. IMF does not make this type of prescription for the welfare of countries like Bangladesh; rather intention of these prescriptions is to ensure interests of multinational companies.

Badrul Alam said, the new VAT law will create additional burden for the farmers and agriculture of Bangladesh. Direct tax must be collected form multinational companies rather than imposing new tax burden for the poor. Various multinational companies are evading taxes using various techniques. For example, four cell phone operators have evaded about 3100 crore taka, British American Tobacco evaded 1924 crore taka. These taxes have to be collected

Subal Sarkar said, the main intention of IMF is not development, rather to bring Bangladesh in the trap of loan. Their prescriptions in various countries have been failed. 18 Sub-Saharan countries are implementing VAT laws according to IMF prescription, but they have been failed clearly to achieve the goals of making the tax-GDP ratio 18-20%. Research shows, tax-GDP ratio in these countries have been decreased!

Sanat Kumar Bhowmik said, contribution of direct tax in Bangladesh is lower than other developing countries. In India direct tax is 35% of total revenue collection, Sri Lanka 38%, in rich countries it is about 70%. Focus should be given on direct tax rather than to indirect taxes like VAT, because these taxes impose additional burden on poor people.

Some other demands have also been placed from the human chain such as, no expansion of VAT on essentials, separate tax unit formation, Tax ombudsman, reduction of non-development expenditures, string actions against black money.

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