The Dhaka Chamber of Commerce and Industry (DCCI) on Thursday expressed concern over the negative impact of the government's decision to raise VAT on 43 products and services.
The cost of industrial production would rise if the proposed gas price hikes are approved, creating inflationary pressure, it said in a press release.
Petrobangla has proposed the Bangladesh Energy Regulatory Commission (BERC) double the price of gas per unit for industrial and captive consumers from Tk 30.75 and Tk 31.50, respectively, to Tk 75.72, claiming this would reduce the government's gas production subsidy burden.
Meanwhile, the National Board of Revenue (NBR) has decided to increase taxes on motorcycle, refrigerator, air-conditioner, and compressor makers from 10 per cent to 20 per cent.
It is crucial to maintain an investment-friendly environment by offering long-term tax benefits and ensuring policy consistency in order to support trade and sustainable economic growth, DCCI said.
Raising gas prices without guaranteeing an uninterrupted supply poses a significant challenge to industries and would increase the cost of doing business, it further said.
DCCI believes such gas price hikes in the current economic situation will harm the investment climate, discourage the opening of new factories, and hinder the existing business operations.
The production costs for export-oriented industries would rise, weakening Bangladesh's export competitiveness as well as discouraging local and foreign investments, it said.
The proposed increase in VAT, gas prices, and tax rates would further strain the economy and reduce competitiveness in the global market, it also said.
DCCI suggested joint initiatives by the government, the private sector, and stakeholders to address the economic challenges and create a cost-effective business-friendly environment.
The tax hikes on motorcycles, refrigerators, air-conditioners, and compressors are unfriendly to industries, especially with prior promises of tax benefits in these sectors until 2032, said the trade body.
Retracting promised tax benefits could signal policy inconsistency, deterring both local and foreign investors. This move would severely impact foreign investment and place local investors in a difficult position, DCCI noted. It urged BERC and Petrobangla to reconsider the gas price hike proposal in light of the economy's recovery amid global instability.
The business chamber also requested the government to review the decisions on increasing VAT and tax rates in order to reduce the pressure on operating costs and inflation.
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