Tax cuts leave hardly any impact on prices

The recent tax cuts have had a limited impact on commodity prices, leaving many citizens to continue to face economic hardships.

Although the duties and taxes on the import of essential items have been lowered in response to the ongoing economic hardship, the expected impact has been observed only in a few sectors.

Md Abdur Rahman, Chairman of the National Board of Revenue (NBR), made these remarks at a press briefing held in conjunction with the VAT Day 2024 at NBR premises on Monday.

The VAT Week will be observed from December 10 to 15, 2024.

The NBR had projected a decrease in consumer prices following the tax cuts; however, the results have been disappointing.

Mr Rahman emphasised the need for addressing irregularities in the tax system and indicated that a public protest might be necessary. He mentioned that the duties and taxes would be reinstated to their previous levels once the economic situation improves.

Tax exemptions cannot be sustained indefinitely, and development partners are advocating for the gradual elimination of the wholesale tax breaks, he said, adding that the revenue authority intends to engage in discussions with stakeholders to make informed decisions moving forward.

Additionally, efforts are underway to introduce a single VAT rate, Mr Rahman said.

Currently, the number of businesses registered to pay VAT is significantly lower than the number of income taxpayers.

Only 500,000 businesses submit VAT returns, in stark contrast to the 11 million income tax payers. To expand the VAT net, the NBR must restore confidence among businesses, Mr Rahman said.

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