Experts have raised concerns over rising taxes amid high inflation, criticizing the government’s heavy reliance on indirect taxation, particularly VAT, which they say disproportionately affects lower- and middle-income groups.

At a roundtable organized by Jagonews24.com titled “Additional Tax Burden on Consumers: Steps to Overcome,” economists and business leaders argued that the government is using short-term fixes rather than implementing long-term tax reforms.

In January 2025, the government increased VAT to 15% on 43 categories of products and services, citing the need to improve the tax-GDP ratio.

However, experts say this has worsened financial pressure on consumers already struggling with inflation.

Khandaker Golam Moazzem, Research Director at the Centre for Policy Dialogue (CPD), noted that inflation had been artificially controlled at around 6% but surged due to International Monetary Fund (IMF) conditions. “Food inflation is the main driver. Import costs and the strong US dollar have rendered duty reductions ineffective,” he said.

Bangladesh’s revenue shortfall is Tk 420 billion, though the IMF estimates it to be nearly Tk 850 billion.

Dr Mustafa K Mujeri, former Director General of BIDS, called the government’s economic decisions “wrong decisions at the wrong time,” adding that IMF-led strategies have historically failed in Bangladesh.

Policy Exchange Bangladesh Chairman Dr M Masrur Riaz stressed the need for Regulatory Impact Assessments (RIA) before imposing taxes, warning that frequent policy shifts and discretionary tax measures discourage investment.

Experts urged the government to adopt clear, pro-business tax policies to ensure economic stability.