Withdraw VAT expansion plan and ease the Poor’s livelihood


Dhaka, 27th June 2012. Today twenty civil society rights group networks and organizations in a rally and human chain organized in front of national press club, Dhaka has expressed worried on continuous expanding nature of revenue i.e., administrative expenditures, they mentioned that there are lessons in whole world even in India how they are taken steps to maintain austerity, but our government approach is lukewarm in this regard. They also demand to the government and the Finance Minister to reconsider to withdraw the new proposed VAT expansion in upcoming national budget for the FY 2012-13, as those will be a cause of further hardship for poor, low and middle income people.

The rally was moderated by Mostafa Kamal Akanda of EquityBD; other speakers of the rally were Prodip K Roy of Online Knowledge Society, Subal Sarkar of Bhumihin Somity, Mohiuddin Hawlader of Bangladesh Krishok Federation (BKF), Syed Aminul Hoque of EquityBD and Mahabub Hossain of Coastal Development Partnership (CDP). Apart from above mentioned organizations and networks other participating organizations are Development Centre Initiatives, Eventful Bangladesh Society, Manush Manusher Jonny, Media Foundation for Trade and Development, Prodip, SDO, Sirac Bangladesh, UP Trust, Surrakha Foundation, United People’s Trust and VOICE.

In the position paper the group mentioned that , government has planned to impose VAT in all sort of business activities like domestic production, import goods, all sort of food grain, essential services especially government health and education services also has included under VAT net and also planned to impose VAT in all sort of small business in retail level production sale. This strategy of revenue collection would be a cause of hardship of our poor and lower middle income people those are the major part of population as their income has not been increased in expected level in last few years. They criticized government has failed to control the inflation in last fiscal three years which was a great pain and undermining the purchase capacity of people. In this context they demand the government to withdrawal VAT expansion plan and emphasis to collect revenue based on the direct tax i.e., which could be from property tax, income tax from the higher level income population, and taxes from corporations.

Syed Aminul of EquityBD has said that government has taken easy option for collecting tax and revenue and imposed new tax and surcharge on mobile call, interest on savings and pro poor services, for retaining subsidies for energy sector. In fact these subsidies will benefit the rental owners and not will benefit the poor, rather create additional burden for them. He cited examples that while in Bangladesh indirect tax like VAT contribute about 70 % and direct tax contribution is about 25 %, whereas in developed countries especially in Europe and America contribution of direct tax all most 70 %.

Mahbub Hossain of CDP criticized the government for projection of only 25% revenue collection from direct tax in 2012-13 fiscal years. He said that this is our shame to fail the expected level of revenue collection from direct tax according to our GDP and the volume of service sector.

Mohiuddin Hawlader of BKF said that, government budgetary plan is contradictory with vision 2021 and poverty reduction as because the inflation and proposed new additional VAT will play duel factor to increase poverty in our country. Government has imposed additional VAT following IMF advice and where government owns self failed to control inflation.

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