Bangladesh: Instead of uniform VAT, Dhaka should look to India’s GST regime

When governments run short of money, they often reach for the tax that is easiest to collect instead of the one that is fairest. In Bangladesh, that instinct is visible again in the renewed push for a uniform 15% value-added tax across sectors and the possible return of package VAT for small businesses.

Officials argue that a simplified, broader VAT will raise revenue, reduce distortions and stabilise the budget. But for ordinary Bangladeshis, a uniform VAT is unlikely to bring genuine financial respite. It may do the opposite, raising the cost of living while leaving the deeper weakness of the economy untouched.

VAT is charged when people buy goods and services. For long, Bangladesh’s tax structure has leaned heavily on indirect taxation.

In recent fiscal years, VAT and supplementary duty together have accounted for roughly one-third to two-fifths of National Board of Revenue collections, equivalent to about $11 billion to $14 billion annually depending on exchange rates and total receipts, while income tax has usually contributed around one-third, or roughly $9 billion to $12 billion.

In several years, VAT alone has outpaced income tax as the single largest source of tax revenue, with standalone VAT receipts often estimated in the $8 billion to $10 billion range.

The Daily Star newspaper recently noted that VAT...

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