Staff Correspondent

Chief Adviser's Press Secretary Shafiqul Alam on Sunday assured that the recent hike of VAT and supplementary duty on goods and services would not have a massive impact, rather it would be minimal, stressing that the government wants to take Bangladesh's tax-to-GDP ratio to a healthy state to help the country’s economy grow fast.

“We really want Bangladesh's tax-to-GDP ratio to go to a healthy state so that Bangladesh's economy grows,” he said, highlighting the problems of having a lower tax-GDP ratio including challenges in addressing development needs of Bangladesh and difficulties to repay the debt Bangladesh has.

Briefing reporters at the Foreign Service Academy, Alam said the government is trying to take the country's tax-GDP ratio to a healthy state by imposing a simplified 15 percent VAT (value added tax).

“Obviously, we are not saying that there will be no impact. We think it will be minimal and there would be no massive impact,” he said, while responding to a question and highlighted the importance of having macroeconomic stability.

Alam said he does not see any reason that the government will become unpopular as the government is concentrating on keeping the financial health of the country stable.

Bangladesh, a country with a low tax-to-GDP ratio, is unable to invest adequately in critical social sectors such as health, education and social protection.

Low revenue from taxes hinders economic growth and perpetuates cycles of poverty and inequality, according to economist Selim Raihan.

Press Secretary Alam said the tax-GDP ratio in Bangladesh has been going down since 2021. It has reached such a level this year that there is a revenue shortfall of about Tk 42,000 crore in the last five months, he added.

"We had a revenue collection target of Tk 1,69,000 crore (during the last five months) but we have collected over Tk 1,26,000 crore," he said.

Mentioning that Bangladesh's tax-GDP ratio is one of the lowest in the world, Alam said the tax-GDP ratio must reach a better position for the growth of Bangladesh and wellbeing of its people.

“For the growth of Bangladesh, for the well-being of the people of Bangladesh, Bangladesh's tax-to-GDP ratio must be taken to a certain point. In that context, VAT has been imposed. There were many different rates of VAT. We also want to bring the whole thing to a simplified 15%,” he said.

He said the government is trying to cut public expenditure and referred to the widespread misuse of public money during the previous regime.

CA’s Deputy Press Secretaries Apurba Jahangir, Abul Kalam Azad Majumder and Assistant Press Secretary Suchismita Tithi were also present.