The demand for oranges as a dietary supplement remains high throughout the year, as dengue and normal fever have become year-round health concerns in Bangladesh.
Still, the government hiked the supplementary duty on imports of this fruit by 10 per cent to 30 per cent, which pulled up the import cost by Tk 15 per kg. Its total duty and tax will now stand at Tk 116 per kg, while the retail price is expected to range from Tk 250 to Tk 280 per kg.
Alongside oranges, the government also raised taxes and supplementary duties on many other goods and services, including other fruits, cooking gas, mobile phone talktime, internet packages, restaurant meals, biscuits, tissues, corrugated iron sheets, and paints. The authorities concerned issued ordinances in this regard.
On condition of anonymity, two officials from the National Board of Revenue (NBR) told Prothom Alo that the increased duties and taxes are expected to generate an additional Tk 120 billion in annual revenue, helping the government reduce its fiscal deficit.
The entire amount will come directly from the public’s pockets. In a statement on 5 January, the NBR claimed that the newly imposed duties and taxes exclude daily necessities and, thereby, are not expected to intensify inflation.
Economists, however, came up with a different view as they described a significant number of the commodities – such as fruits, mobile talktime, internet, tissues, cooking gas, and restaurant meals – as essentials in the current perspective. Therefore, the increased taxes and duties will burden middle- and lower-income groups significantly.
Also, they find no point in raising taxes on products that were already under high taxes. The Awami League government imposed regulatory duties on imported fruits in 2022, and their total taxes now stand at 136 per cent. A kilogram (kg) of apples sells for Tk 300-340, medium and large oranges for Tk 260-320, and green grapes for Tk 450-460. The high rate of foreign fruits helps the traders to charge extra for local fruits.
Sirajul Islam, president of the Bangladesh fresh fruits importers association, denounced the hike in taxes and duties, saying the foreign fruits, once affordable to both the rich and the poor, have now been accessible to the rich only due to the hike in tax and duties.
Breakdown of tax hikes
The extent of tax hike varies depending on the product. A 12kg liquefied petroleum gas (LPG) cylinder will now incur Tk 102 in taxes, up by Tk 7, while a packet of facial tissues worth Tk 65-70 will see a tax increase of Tk 4 to Tk 7-8, and clothing and restaurant meals worth Tk 1,000 will rise by Tk 75 to Tk 150 in taxes.
Meanwhile, mobile phone calls and internet usage will add an extra tax of Tk 2 for a Tk 100 recharge. The total tax on broadband internet now stands at Tk 77.50 on a Tk 500 bill, up from Tk 25 previously. Internet service providers (ISPs) used to refrain from collecting the tax from consumers, but the 10 per cent supplementary duty will leave them with no choice but passing the burden onto the consumers.
While reacting to the tax hike, a senior official at a leading biscuit company said the VAT on a 250-gram packet of biscuits has risen from Tk 4.20 to Tk 9, necessitating a price hike. Besides, gas price is likely to rise further. Considering all expenses, the price of a packet of biscuits might be raised from Tk 60 to Tk 70.
Similarly, cinema ticket prices are likely to go up as a ticket costing Tk 300 is now subjected to Tk 45 in VAT, up from Tk 30. According to a popular cinema hall in Dhaka, the price will be fixed at a round figure, likely to be higher than the exact amount, to avoid complications in payment.
The LPG operators association of Bangladesh (LOAB) noted that the cost of 12-kg LPG cylinders will rise by Tk 43 due to the increased tax. Its president Amirul Haque told Prothom Alo that their cost increased due to the tax hike but the price is yet to be adjusted.
In the construction sector, some products and raw materials have been brought under additional tax. The industries produce corrugated iron sheets from hot-rolled coils. Its VAT has been hiked from 5 per cent to 15 per cent.
Amir Hossain, director of the PHP family, told Prothom Alo that their business has already been in difficulties due to low sales, and the VAT hike may drag it down further.
The cost of essential factory materials like white coating poly, used in paints and varnishes, has also surged. The importers used to pay Tk 382 in taxes and duties while importing the poly, and the cost has now risen to Tk 449 per kg due to the supplementary duty hike.
Public reaction
The increased taxes have sparked public frustration. At the Bashundhara City Shopping Complex in Dhaka on Saturday evening, some clothing outlets were charging VAT as per the new rate, sometimes leading to an altercation with customers.
Rafat Ahmed, a private-sector employee, said he has been charged an additional Tk 150 in VAT for a shirt, though the price tag was showing a lower price. The store manager explained that they are chagrin with VAT as per the new rate, but are yet to update the price tag.
Arifur Rahman, manager of Almas Super Shop, shared that many customers were reacting negatively to the additional taxes.