Unfamiliar items fatten VAT-free list

Many commodities, hardly used by general people, have found their place on the long list of items kept out of the purview of 15 per cent value added tax from the new fiscal.
Officials said the government also kept live birds like turkey, guineabirds and dove, canned animal meat like camel and lamb, canned fish, oyster and crab on the list of VAT-free 1,043 products.
Imported fruits like cashew nut, Brazil nuts, cherry, apricot, peach, plum, sea-weeds and sea-moss would enjoy VAT-free entry to the local market along with rice, paddy, puffed rice, wheat, flour, salt, edible oil, sugar and milk.
Uses of electricity to many projects like Rooppur Nuclear Power Plant, Bangladesh High Tech Park is VAT-free as per the list although general consumers have not given any VAT rebate with their electricity bills.
Services like scrap collection from street urchins, fairs of agricultural products, animals and birds, forestry, and art literature, consultancy for agriculture and fisheries have been included to fatten the list.
They noted that government included many unfamiliar products and services to magnify the long list with the aim of dispelling looming price hike of commodities as forecast by economists and businesspeople following introduction of new uniform VAT rate.
Asked whether National
Board of Revenue intentionally widened the list of VAT-free products and services to give wrong impression about the new VAT law during a post-budget press conference on Saturday, NBR chairman Nojibur Rahman said, ‘The government prepared the list’ after examining many things and in consultation with the stakeholders.
The government identified over 1,000 products on the new list where as only 536 products were on the previous list, he claimed.
Finance minister AMA Muhith has dismissed fear of price hike of commodities, but economists apprehend that the proposed 15 per cent VAT will have serious adverse impact on consumer items and increase inflation.
Once the new VAT rate comes into effect next month, the prices of commodities that did not come under the 15 per cent VAT might go up, said adviser to a former caretaker government Mirza Azizul Islam.
Commodity market monitoring system was very weak in the country, he noted
The government has aimed at collecting the highest 36.8 per cent of total projected revenue of Tk 2,48,190 crore from the VAT in the new fiscal.
The amount of projected revenue from the VAT was 35 per cent in the original revenue budget of Tk 2,03,154 crore in the outgoing fiscal.
The budget documents show that percentage of direct tax which is more effective than VAT for removing inequality remains static in the new budget compared to the previous budget.
Distinguished fellow of Centre for Policy Dialogue Debapriya Bhattacharya said the government focused mainly on VAT to generate higher revenue although VAT was always a rigorous tax.
VAT forced all consumers, irrespective of their income, to pay the same amount of tax, he said, adding that inflation would go up in the coming fiscal year due to the proposed VAT rate.
He said lower- and middle-income people would bear the brunt of the government plans for higher VAT collection.
The new Value-Added Tax and Supplementary Duty Act was enacted in 2012 replacing the Value Added Tax Act 1991 but the government could not implement the major features of the law due to protests from businesses and lack of consensus on the proposed uniform rate of VAT.

Source: New Age