C T Online Desk: The government has increased VAT on certain goods not under pressure from the International Monetary Fund (IMF) but to improve the tax-to-GDP ratio, said Shafiqul Alam, Press Secretary to the chief adviser.
He made this statement during a press conference at the Foreign Service Academy in the capital on Sunday evening.
Shafiqul Alam said: “To enhance the nation’s welfare and boost growth, we need to increase the tax-to-GDP ratio. Consequently, VAT has been increased on some items.”
He added: “In essence, we aim to position taxes in such a way that ensures economic growth. A declining tax-to-GDP ratio means that debt repayment could become challenging. While we acknowledge that tax increases may have some impact on people, we believe this impact will be minimal.”
When asked whether the VAT increase was influenced by IMF pressure, he said: “Why would we depend on the IMF’s recommendations in this matter? We have our own economists. What we need now is macroeconomic stability. Without stability, the value of the currency depreciates. To achieve this stability, we must increase the tax-to-GDP ratio. Over the past five months, our revenue shortfall has been Tk42,000 crore. We need to address this gap.”
The press secretary added: “When the country’s financial health improves, inflation tends to decrease. The IMF loan itself is not the primary issue here. However, a good relationship with the IMF provides the best recommendations for macroeconomic stability. Additionally, their involvement makes it easier for us to attract investments from entities like the World Bank and other external sources.”
