BNP suggests cutting govt expanses without increasing VAT

Bangladesh Nationalist Party (BNP) has urged the interim government to focus on reducing unnecessary development activities and expenses of the government and budgetary allocation for loans to autonomous bodies without increasing value added tax (VAT).

Party’s Secretary General Mirza Fakhrul Islam Alamgir made the call at a press conference titled ‘Taxes and VAT imposed by the interim government will further increase the people’s sufferings’ at BNP Chairperson’s Gulshan political office here today.

“We think if the government reconsiders its development budget and eliminates unnecessary and financially unreasonable projects, it is possible to reduce expanse by about 20 percent and this will help save about Taka 60,000 crore (in the current fiscal),” he said.

Mirza Fakhrul said if the government reduces the expenditure in the local government budget and subsidy sector and can reduce the overall operating expenses by 10 percent, then a minimum of Taka 50,000 crore can be saved.

Moreover, the government can temporarily save expenses by reducing the loan budget given to autonomous institutions, he observed.

In the 2024-25 fiscal year, a loan budget of Taka 50,875 crore was made for autonomous institutions.

The government can save at least Taka one  lakh crore in the budget and reduce the deficit by decreasing expenses, he said, adding that these steps are very important for the economic stability and long-term development of the country.

“These initiatives to reduce the government’s expenses will reduce the tax burden on the common people and ease the economic pressure. As a result, the people will be financially stable and the overall economy of the country will develop,” he added.

The BNP secretary general said that strong dissatisfaction is being observed in various circles related to the financial sector, including the business community, with the sudden decision of increasing VAT in various products.

Criticizing the VAT system, he said that the country’s economic condition has already become fragile due to the corruption and mismanagement of the ousted Awami League government.

In this fragile condition, trying to meet the government’s expenses by increasing the VAT rate or tax will not be beneficial for the people of the country, he said.

“We should remember that the people of this country have sacrificed their lives selflessly to get rid of the Awami League misrule. Let us not take them back to that misrule by adopting wrong policies,” he said.

The BNP Secretary General reiterated the party’s stance to continue extending fully support and cooperation to the interim government.

“Therefore, we request the government to consider the people’s views first in formulating policies. In the current economic reality of the country, there is an opportunity to consider other ways to collect revenue and work accordingly,” he suggested.

Urging the government to focus on increasing direct taxes instead of increasing indirect taxes, the BNP Secretary General said, because indirect taxes affect all classes of people almost equally and increase the burden on the lower class people.

Even without increasing direct taxes, the ongoing financial problem can be solved by reducing government expenditure (Cost Cutting) and reorganizing the financial management of the current budget, he said.

Mirza Fakhrul said the current interim government has imposed VAT and supplementary duty on more than 100 products amid the ongoing economic instability and high inflation and has withdrawn tax exemptions for some products including essential food items, clothing, medicines and mobile internet services.

The government’s statement suggests that they have increased VAT to cover the first phase of the current fiscal year’s budget deficit of Tk 42,000 crore and the possible subsequent deficit and to meet the Tax-GDP Ratio condition for the IMF loan, because the government is not able to meet the budget expenses with the current revenue.

Similarly, a few days ago, the government printed Tk 22,500 crore to address the liquidity crisis of some looted banks.

“We understand that in the post-Awami fascism period, chaos and fragile conditions in the financial sector, like other sectors, have created subsequent challenges. However, BNP is concerned about the impact of such a decision by the current interim government on the lives of the common people,” he said.

The ousted AL government practically destroyed the country’s economy through corruption and looting for the last 15 years, he said adding that as of December 2024, foreign exchange reserves have fallen to $21 billion, the country’s inflation has risen to about 11pc, in many cases it has increased to more than 25 pc.

The country’s total debt has crossed Tk 20 lakh crore (Figure 01) and due to the liquidity crisis in the banking sector, people are not getting their hard-earned deposits back, he said.

The BNP secretary general said that in reality, it is a big challenge to bring the country’s economy back to a normal and dynamic state.

BNP Standing Committee member Amir Khasru Mahmud Chowdhury and Chairperson’s Advisor Ismail Zabiullah were present, among others, in the press conference. (BSS)