The bitter taste of increased VAT on biscuits

The biscuit, a staple snack and vital source of nutrition for millions of Bangladeshis, is now at risk of becoming unaffordable for the very people who rely on it the most. The recent increase in Value Added Tax (VAT) on agro-processed food items, including biscuits, from  per cent to 15 per cent, as stipulated in the "Value Added Tax and Supplementary Duty (Amendment) Ordinance, 2025," threatens the industry.

This tax hike is poised to create a ripple effect, with the poorest and most vulnerable communities suffering the most. Biscuits, sold at an accessible price of Tk 5, have long been a nutritional source for school-going children, underprivileged youth, and low-income families. With the increase in VAT, manufacturers will no longer be able to produce biscuits at lower cost, thereby cutting off an essential source of sustenance for many.

IMPACT ON NUTRITION AND FOOD SECURITY: For children and students, especially in rural and low-income urban areas, biscuits are more than a snack-they are a vital source of energy and nutrition. Many students depend on affordable food options like biscuits to stay energized throughout the school day. By making these products inaccessible, the VAT increase undermines national efforts to improve child nutrition and combat malnutrition. This may further exacerbate food insecurity, particularly among families already grappling with high inflation and rising living costs.

ECONOMIC AND SOCIAL CONSEQUENCES: The biscuit and agro-processing industries have long been engines of economic growth and employment in Bangladesh. These industries not only provide jobs for over 250,000 workers, many from low-income backgrounds, but also support marginal farmers who supply raw materials. The increased VAT will inflate production costs, reduce demand, and force many manufacturers to scale back operations or shut down entirely.

The likely result is job losses and economic instability. With fewer jobs and diminished purchasing power, the social fabric of communities will face severe strain, potentially leading to unrest and increased poverty.

A BLOW TO EXPORTS AND NATIONAL DEVELOPMENT: The biscuit industry is not just vital domestically-it also contributes significantly to foreign exchange earnings by exporting to over 145 countries. The increased burden on manufacturers can erode the industry's competitiveness in global markets, leading to a decline in exports and a loss of valuable foreign exchange.

This decision also contradicts the ambitions to support the growth of agro-processing industries. The current tax hike stands in stark opposition to supporting the growth of Bangladesh's export basket and undermines the industry's potential to contribute to GDP growth and national development.

A PLEA FOR RECONSIDERATION: The consequences of this tax policy extend far beyond the industry itself-they impact nutrition, employment, education, and the overall well-being of millions. The government must urgently reconsider and reverse this decision. Tax rebates on essential food items like biscuits, as practiced in many countries, could serve as a model for supporting both the industry and the people it serves.

As a nation striving for inclusive development, Bangladesh cannot afford policies that deepen inequality and disproportionately affect its most vulnerable citizens. The government must prioritise the needs of the people over short-term revenue gains, ensuring that essential items like biscuits remain affordable and accessible for all.

Let us not allow a policy decision to deprive millions of their daily bread-or in this case, biscuit.