Public discontent over increased VAT and dearness allowance.
The sudden increase in value-added tax (VAT) and supplementary duty (SD) on over a hundred goods and services in the middle of the fiscal year has started to affect the market. Companies that were already compliant, that is, those that had been collecting VAT according to the rules, have started collecting the increased VAT. This has increased the cost pressure of the common man on various goods and services. As a result, the inflation rate will remain on the rise. In the meantime, the government is planning to increase the dearness allowance of government officials and employees. Experts believe that this may further increase inflation.
The Finance Department says that the government is planning to provide dearness allowance to 1.4 million government employees at a rate of a minimum of 10 percent to a maximum of 20 percent of the basic salary. For this, the government will have to spend at least 7 thousand crore taka in a year. Economists and experts believe that this additional expenditure is not reasonable in the current situation.
It is known that during the rule of the autocratic Awami League, a nepotism economy was developed under the rule of oligarchs. In that situation, people from all walks of life took to the streets in July-August with the desire to get rid of the all-encompassing crisis. A unique history was written with their sacrifice. But the interim government is going to increase the salaries (dear allowance) of government employees within five months of taking office. This is very logical, said the press secretary of the chief advisor, Shafiqul Alam. The government’s decision has caused strong dissatisfaction among low-income people.
Pushcart driver Bulbul Ahmed lives in Bangshale, Old Dhaka. He said, I heard that the salaries of government employees will increase. If that happens, will our pushcart rent also increase? Otherwise, we will not be able to survive. Buying fish and meat has already stopped. Private sector employee Md. Enamul Haque said, “The pressure of high inflation is making our lives miserable.” Inflation is increasing due to various government policies. However, attention needs to be paid to reducing inflation.
Meanwhile, BNP Secretary General Mirza Fakhrul Islam Alamgir has said that the interim government will increase the suffering of the country’s poor by taking the easy path of increasing revenue by increasing VAT and customs duties. He believes that giving expensive allowances to government officials and employees in the current situation will ‘undoubtedly create problems’. He called for the immediate withdrawal of ‘irresponsible’ decisions like imposing indirect taxes on the people and advised the interim government to reduce expenditure to meet the budget deficit.
The government has untimely increased VAT on more than a hundred products to increase revenue collection. Although a VAT review was later announced for a couple of products. An additional 12,000 crore taka will be deposited in the government treasury at the end of the fiscal year due to the additional VAT. Although this was done to comply with the IMF’s conditions. However, the IMF asked to increase revenue by expanding the tax net.
Former Commerce Secretary Golam Rahman told our time, the increase in VAT is putting pressure on inflation. But the government needs money now. Either the government will have to borrow or increase revenue. In this case, it is better to collect money by increasing taxes than borrowing from the central bank. Even then, it will increase pressure on inflation. On the other hand, increasing dearness allowance can create pressure on the market. Because as a result, if demand increases in the market, it can affect inflation.
He also said, although there is talk of controlling inflation, it does not seem to be under control soon considering the overall situation. We have seen that it was said that loans would not be given by printing money to save the banking sector. But the word is not being kept. Therefore, it cannot be said that inflation will come down soon.
Dr. Zahid Hossain, a member of the white paper formulation committee and former chief economist of the World Bank, said that wrong policies are among the reasons for the increase in inflation. He said that oil has been poured instead of water to extinguish the fire of inflation. Due to which it has not come to a tolerable level.
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