Over-reliance on indirect taxes may hurt economy, experts warn

Economists, tax experts, and business leaders on Monday warned that excessive dependence on indirect taxes such as value added tax (VAT) and tax deducted at source (TDS) could have adverse impacts on the economy, businesses and consumers.

They expressed concern over the growing reliance on indirect taxation in the proposed fiscal framework ahead of the national budget.

They were speaking at a discussion styled as “Over-reliance on Indirect Taxes: Multidimensional Impacts on the Economy,” organised by Voice for Reform at the BDBL Bhaban in the city's Kawran Bazar area.

They said policymakers often overlook the broader economic consequences of increasing VAT and TDS rates, particularly their disproportionate burden on low- and middle-income groups.

Snehasish Barua (FCA), director of SMAC Advisory Services, presented the keynote paper at the discussion.

Among the speakers Dr Masrur Riaz, chairman of Policy Exchange Bangladesh; Doulot Akter Mala, president of the Economic Reporters Forum and special correspondent at The Financial Express; Mohammad Farid Uddin, former member (VAT) of the National Board of Revenue (NBR); and Prof Dr M Abu Eusuf of Dhaka University and executive director of RAPID, spoke on the occasion.

They stressed the need for structural reforms, widening the direct tax base and improving tax administration instead of relying heavily on indirect taxes for revenue mobilisation.

Fahim Mashroor, co-coordinator of Voice for Reform, moderated the session.

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