Govt Raises VAT to Improve Tax-GDP Ratio: CA Press Secretary

Chief Adviser's Press Secretary Shafiqul Alam stated today that the government is raising VAT to improve Bangladesh's tax-GDP ratio and support economic growth. Speaking at a press briefing at the Foreign Service Academy, Alam explained that the country's tax-GDP ratio has been declining since 2021, leading to a revenue shortfall of approximately Taka 42,000 crore over the last five months.

“Our revenue target for the past five months was Taka 1,69,000 crore, but we collected only Taka 1,26,000 crore,” Alam said. He emphasized that Bangladesh's tax-GDP ratio is among the lowest in the world, and improving it is crucial for the country’s growth and the welfare of its people.

To address this, the government is simplifying VAT rates, consolidating them into a single 15 percent rate to reduce tax leakage. Alam also noted that efforts are underway to cut public expenditure, citing examples of misused public funds during the previous government, such as the construction of the Karnaphuli Tunnel and a seven-star hotel in Chattogram, which allegedly cost Taka 450 crore in public money.

Alam further warned that if the tax-GDP ratio continues to fall, it could hinder Bangladesh's ability to repay its debt. He assured that the increased taxes would be used for the country’s development and welfare, with minimal impact on the general public.

When asked about the government's efforts to recover laundered money, Alam reiterated that it remains a top priority. He revealed that the government is working with various countries to trace and return the illicit funds and is receiving cooperation in this effort.

Chief Adviser’s Deputy Press Secretaries Apurba Jahangir and Abul Kalam Azad Majumder, and Assistant Press Secretary Suchismita Tithi were also present at the briefing.