NBR eyes most of Tk 120b from four prohibitively taxed items

Over one-third of the projected Tk 120 billion in additional revenues that the government expects in the next six months through a surprise VAT hike will come from four prohibitively taxed items, officials say.
These include cigarettes, artificially flavored drinks, and both carbonated and non-carbonated electrolyte drinks.
These are among the 100 genres of products and services that carry ramped-up value-added tax or VAT following a mid-year fiscal measure adopted by the finance authority of the post-uprising interim government.
The National Board of Revenue (NBR) estimates it will collect Tk 45 billion in taxes from these four types of products, mostly known as health-hazardous and sugary items.
A summary, obtained by the FE, which was presented to the Finance Adviser outlines the hikes in VAT and projected revenues.

Furthermore, increasing taxes on airfares is projected to bring in Tk 10 billion, the second-highest source of additional revenue.
Experts caution low- and middle-income people will suffer most for the VAT increases, as prices of essential items like medicine and biscuits are expected to rise.
According to the NBR's estimate, the tax increase on medicines is projected to generate an additional Tk 1.0 billion.
Officials have, however, stated that with most lifesaving medicines being exempt from VAT, only a few are facing price increases.
"Though raising taxes mid-year through an ordinance is challenging, the NBR has tried to minimize the impact on marginalized people by excluding essential goods from the tax hikes as much as possible," says one revenue official.
Taxes on mobile phones and hotel-restaurants are expected to generate Tk 3.0 billion, while supplementary duty on internet- service providers is projected to yield Tk 5.0 billion.
The increase in VAT on non-AC hotels, sweet shops, procurement providers, and readymade-garment marketing businesses is expected to contribute an additional Tk 26.60 billion in the January-June period of the outgoing financial year ( FY2024-25).The NBR also eyes an additional Tk 2.0 billion from restaurants and indenting agencies.
Supplementary Duty on internet services is expected to generate Tk 5.0 billion. Imposing a 10-percent supplementary duty on limestone and dolomite could mobilize an additional Tk 5.0 billion.
The withdrawal of VAT exemptions on plastic tiffin boxes, water bottles, and rubber footwear is projected to generate Tk 100 million.
Adjustments to VAT on imports of fresh fruits, juices, nuts, unmanufactured tobacco, paints, soap, and detergents are expected to yield Tk 2.0 billion.
Supplementary Duty at the supply stage on fruit juices, fruit drinks and paints is projected to fetch an additional Tk 6.0 billion.
The increase in VAT at the business stage on LP gas, and local businesses is expected to generate nearly Tk 4.0 billion.
Additional taxes from motor garages, workshops, dockyards, printing presses, film studios, cinema distributors, service providers, automatic sawmills, sports organizers, transport contractors, board -meeting participants, tailoring shops, floor cleaners, and social and sports- club consumers are projected to contribute an additional Tk 2.0 billion.
Businesses dealing in electrical poles are to pay an additional Tk 2.40 billion.
The tax hikes on kitchen towels, toilet tissue, napkin tissue, paper towels, and sunglasses are projected to generate Tk 500 million.
Sectors including potato flakes, maize starch, biscuits, tomato paste, transformer oil, petroleum bitumen, hard rock, CR coil, HR coil, and spectacles are expected to contribute an additional Tk 8.0 billion in taxes.
Raising the turnover-tax ceiling and VAT- registration threshold is expected to bring in an additional Tk 10.0 billion in revenue.
The VAT hike on electrical poles would bring an additional Tk 2.40 billion.
Tax hike on import of fresh fruits, fruit juice, paints, varnish, soap, detergent, betel nuts would generate additional Tk 2.0 billion taxes.
VAT on restaurants and indenting agencies has been increased to 15 per cent from 5.0 per cent. With the increase, the NBR expects to collect an additional Tk 2.0 billion.
Former president of the Foreign Investors Chamber of Commerce and Industry (FICCI) Rupali Chowdhury is critical of the extra-budgetary fiscal measure--and that at an odd time for business.
"It's surprising to see mid-year changes in taxes for the first time," she says.
Current economic conditions are not favourable for small and medium traders who are struggling to survive, she notes. "Now, VAT hike at straight 15 per cent would jeopardize their efforts to continue," the trade leader fears. Humayun Kabir Bhuiyan, General Secretary of the Consumers Association of Bangladesh (CAB),suggests the government should reconsider the tax hike taking the upcoming Ramadan into consideration.
"Already, TCB's truck sales have been suspended, aggravating suffering of the low-income people," he sys.
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