Revised VAT policy will create burden on poor


Dhaka, 6th June 2011. Today in a seminar at national press club, title “Internal Resource Mobilization and Pro Poor revenue collection Strategies”, organized by EquityBD a network of civil society rights groups, speakers urged government to prepare pro poor and revenue mobilization policy and they urged government to review of its revised VAT (value added tax) policy as they expressed that the new VAT policy in fact ultimately create burden on poor. The seminar was moderated by Rezaul Karim Chowdhury of EquityBD, while main speakers are member of the BNP standing committee Lt. Gen (Retd) Mahbubur Rahman; Monoronjan Shil Gopal MP, Professor Md Ali Asraf and Tazul Islam two MPs, who also the members of parliamentary standing committee on finance ministry, Dr. Mahbub E Rashid of Health Rights Movement and Badrul Alam of Bangladesh Krishok Federation, and prominent economic journalist Asjadul Kibria and Kawsar Rahamn have also spoken on the occasion. Sayed Aminul Haque of EquityBD has presented key note paper.

In key note presentation EquityBD mentioned that future government investment will be mostly dependent on internal revenue mobilization of government, while foreign aid flow is gradually shrinking, he mentioned that direct tax in revenue mobilization is 18 % while indirect tax contribution is 82 %, where VAT is a major part. He mentioned that in developing countries even in countries like in India and Srilanka, contribution of direct tax is around 70 %, 33 % and 31 % respectively. He urged that direct tax net should be expanded. At present only around 50 % TIN (tax identification number) holders are regularly paying taxes. It is also urged that government should take policy measures to bring the invisible economy in the surface which is around 37 % of GDP. Some audit firms assist corporate houses for tax evasion, EquityBD urged to make country’s audit firms more transparent and accountable. EquityBD mentioned that new revised VAT law which has drafted in view of IMF prescriptions contains 31 changes and in fact which will create burden on poor.

Dr. Mahbub E Rashid mentioned that, government tax policy in fact is not redistributive that there will be equity and justice in the class relation of the society. Asjadul Kibria gave several examples that tax policy has structural injustice that it discourage who are self employed, he also mentioned people who pay taxes from hard earn income they are deprived from services. Mahbubur Rahman of WBB Trust has gave an example that how 2 million floating people in Dhaka city pay higher amount for using public toilet with low quality services. He mentioned that foreign companies are getting tax relax facilities that they are repatriating a huge level of profit from the country.

Lt Gen (Retd) Mahbubur Rahamn mentioned government must emphasized in reduction of corruption and different public expenditure so that there will be public confidence to pay taxes. He oppose enhancement of VAT expansion which is a regressive policy toward poor people. Monoranjan Shil and Tazul Islam two MPs stressed the need of internal resource mobilization as government need to be more responsive to its citizen, but they also acknowledge that poor entrepreneur in rural area should be exempted from revised VAT policies. Professor Asharf Ali MP acknowledged that tax and all other administration must be more transparent and accountable so that people will be able to realize that their money is being properly utilized, he gives emphasize on expanding tax net for direct tax rather then expanding VAT up to rural area.

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