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In about every instance of the government's attempt at increasing revenue income from businesses, the burden ultimately falls on the common consumers. The general public, the overwhelming majority of whom are people in the low and middle income bracket, are law-abiding citizens and hence not willing to fall afoul of the law. But that is hardly the case with some business entities which are prone to evade tax and pass the buck to the general consumers. Some 152 items, majority of which belonging to the category of essential commodities such as rice, wheat, edible oils, etc., according to a report published in this paper on June 23, are going to see a price hike with the budget for FY 2025-26 taking effect from July 1 next.
The general consumer will have to spend extra money because the revenue authority will impose Advance Income Tax (AIT) at 2.0 per cent rate at the import stage of many of those commodities. Notably, the items under consideration are exempted from such kind of taxes in the current budget (for FY2024-25). Essentially, the measure aims to gradually phase out exemptions from the tax regime and enhance tax compliance among all the members of the business community and at the same time boost the government's revenue earning. AIT is expected to bring the usual tax-dodgers under the tax net, because they would like to be reimbursed against AIT paid before. Whether such hope of the revenue department would be finally realised remains to be seen.
The tax authority's target is, as could be gathered, to increase revenue collection by around Tk20 billion. But the sectors' targeted for such exemption phase-out include critical raw materials for the country's garment sector such as cotton and manmade fibres. The essential food items include potato, onion, lentil, chickpea, soybean, maize and so on. Also, fertilisers, crude edible oil, sugar, various medical implements, computers, printers, even aircraft and buses will be affected by the new tax regime. It is worthwhile to note that each of the mentioned items to be brought under the phase-out programme is going to affect common consumers. But how is the exemption phase-out measure by the revenue authority affect the average taxpaying citizens? In the case of essential commodities, for instance, traders who import those essential items would avoid submission of tax returns. In consequence, they won't get the opportunity to be reimbursed by the tax authority against AIT they were supposed to pay at the beginning. But to make up for the loss, the only option before them will be to punish the general consumers by hiking up commodity prices. Price hike of essential commodities means a concomitant rise in inflation rate, though the Bangladesh Bank expects that the inflation will remain within the range of 7.0 to 8.0 per cent. But once the impact of AIT on the previously tax-exempted items start to affect the commodities market by pushing up prices, the projection that the inflation rate would at a point decline to 5.0 per cent by the end 2025 may not materialise.
So, any fall in prices of commodities and energy in the next fiscal may turn out to be a pipe dream. Such pessimism is not entirely attributable to the developments at home. Bangladesh being highly dependent on the external markets for its imports as well as exports, any instability in the international market is going to affect not only the economy, but also life in general here. Any disruptions in the energy supply chain arising, for instance, from the ongoing Middle-Eastern conflicts would spell disaster locally. The government's policies ought to be geared to making life easier for common people by reducing additional tax or any other forms of burden.