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Rights group blasts new VAT law

By farjana - Posted on 16 September 2012

Criticising the International Monetary Fund (IMF) for pursuing discredited tax policy in Bangladesh, civil society members at a discussion Saturday urged the government to reconsider new VAT (Value Added Tax) law 2012, which has been prepared to fulfill the IMF conditions, reports UNB.

Although the VAT bill is supposed to be passed in the current parliament session, the prominent citizens said the VAT is regressive to poor, and in respect of taxation policy there should be emphasis on direct tax to reduce tax burden on the poor.

EquityBD, a civil society network of rights groups in Bangladesh, organised the discussion titled 'Revised VAT law 2012 to fulfill IMF Conditionality, a Review: Domestic Resource Mobilisation, VAT and Tax Justice' at the National Press Club in the city.

Moderated by Rezaul Karim Chowdhury of EquityBD, the discussion was addressed, among others, by president of Bangladesh Tax Law Association Saha Zikrul Ahmed, MP, Dr Abu Ahmed of Dhaka University, economist Dr Romoni Mohan Debnath, Zakir Hossion Khan of TIB (Transparency International Bangladesh), Aminur Rasul Babul of Unnayan Dhara, Mahbub Hasan of Coastal Development Partnership, Ahmed Swapan of VOICE and Mostafa Kamal Akanda of EquityBD.

Ahsanul Karim and Syed Aminul Haque of EquityBD jointly delivered keynote 

presentation on the occasion.

In the key note presentation, EquityBD has mentioned that the key difference in law of 1991 and VAT law 2012 is that the new law has a definition to cover all items related to consumption, which could potentially impose VAT on the essential commodities needed by the poor.

EquityBD has demanded to differentiate the definition, especially to keep essential commodities out of the scope of the new law. At present, 37.30 per cent internal resource is mobilised from VAT, while in a developed country like New Zealand it is only 12 per cent.

It has referred to a research which shows that IMF did the same thing in African countries, but in fact it was not possible to attain the expected tax GDP ratio. They cited a research case study from South Africa which claims that while higher income groups pay only 7 per cent, poor families have to pay 10 per cent.