No respite for middle class, cost of living to rise more

The budget may have left a lot to be desired for different income groups, owing to more hike in prices of goods and services at a time of already high inflation.

The proposed budget, placed in parliament by Finance Minister AHM Mustafa Kamal, includes substantial taxes on consumer goods, which are intended to raise the tax-GDP ratio in response to loan conditions imposed by the International Monetary Fund (IMF).

These taxes will only further the stress on wallets and increase the cost of living. 

Even the cost of writing higher 

The proposed budget introduces significant changes in value-added tax (VAT) rates, resulting in price hikes for essential commodities such as pens, stationery products, cosmetics, liquefied petroleum (LP) gas, mobile phones, gold ornaments, home construction materials, cement, etc.

Previously, the production of pens enjoyed VAT exemption, but the proposed budget imposes a 15% VAT on pens, leading to increased prices for consumers.

The ongoing crisis in gas supply has escalated demand for LP gas in households. The finance minister has announced a rise in VAT on LP gas from 5% to 7% at the production stage, aiming to boost revenue income. Additionally, import duty has been imposed on steel and welding wire used in cylinder production, which may further contribute to price increases for LP gas.

In the proposed budget, there has been a notable increase in value-added tax (VAT) rates for home appliances made of plastics, such as tableware and kitchenware. Previously, these products faced a 5% VAT at the production level, but the proposed budget raises it to 7.5%. As a result, consumers may experience a price hike for these plastic household items.

Similarly, household appliances made of aluminium also face an increased VAT rate. This means that prices of aluminium dishes, pots, and pans could see an upward trend. Moreover, import duties on microwave ovens have been raised, potentially leading to higher prices for foreign-made ovens in the market.

However, in an effort to boost revenue collection, value-added tax (VAT) on mobile phones has been raised at the production and assembly stages locally. As a result, consumers can expect a potential increase in the prices of mobile phones.

Want to stay healthy, spend more

If you are someone who regularly includes dates and nuts in your diet for health benefits, the upcoming budget might prompt you to consider more affordable alternatives.

Import duty on cashew nuts has been raised with the aim of promoting local production. Additionally, the prices of imported cashew nuts are likely to increase.

Furthermore, a 20% duty has been imposed on the import of fruits and nuts, while fresh and dry dates now face a 25% duty and 15% VAT to prevent duty evasion. The prices of imported cheese and curd are also expected to rise.

Bad news for smokers, coffee lovers

If you have the habit of smoking cigarettes or indulging in tea and coffee throughout the day, be prepared for a hit to your wallet.

The upcoming budget will witness an increase in the prices of cigarettes, as it has become a customary practice by the National Board of Revenue (NBR) to raise cigarette prices each fiscal year in order to generate revenue. This year will be no exception, and consumers can expect a hike in cigarette prices in the market.

Additionally, coffee mate, an essential ingredient for enhancing the taste of tea and coffee, will also experience a price surge. The import of coffee mate will be subjected to an additional duty of 20%, which will inevitably lead to an increase in its market price.

More tax on travel

The proposed budget introduces a new travel tax of Tk200 for domestic air travel between districts. This marks the first time such a travel tax is being imposed within this sector in the country. As a result, the cost of traveling by air within the country is likely to rise.

Additionally, the proposed budget also includes an increase in travel tax on air tickets for those traveling abroad for tourism, medical treatment, and other purposes.

Consequently, the overall cost of international travel is expected to see an increase as well.

The tax imposed on air travel to SAARC countries, which was previously Tk1,200, has now been raised to Tk2,000.

Similarly, travel tax for air travel to North America, South America, Europe, Africa, Australia, New Zealand, China, Japan, Hong Kong, North Korea, South Korea, Vietnam, Laos, Cambodia, and Taiwan, previously set at Tk4,000 per passenger, has been increased to Tk6,000.

Furthermore, the tax applicable to air travel to other countries, formerly Tk3,000, has been raised to Tk4,000.

As for traveling abroad by land, the current tax of Tk500 will be increased to Tk1,000, while the tax for sea travel, previously Tk800, will also be increased to Tk1,000.

Pay more for gold

The price of gold ornaments may increase in the upcoming budget due to revised baggage rules.

Previously, import duty of Tk2,000 per gold bar was required. However, this duty has now been doubled to Tk4,000. Moreover, if more than one gold bar is brought, it will be subject to confiscation. These measures could potentially result in a limited supply of gold, which may fall short of demand. Consequently, the price of gold jewellery is likely to experience an increase.

Pay more for tissue papers

In light of the rising prices of daily products, if you find yourself in a state of worry, seeking solace in tissue to wipe away your concerns, you may be in for disappointment.

The upcoming budget may increase the prices of various types of tissues. Previously, the production of kitchen towels, including toilet tissue, napkin tissue, facial tissue, pocket tissue, and paper towel, incurred a 5% VAT.

However, this VAT has now been raised to 7.50%, potentially leading to an increase in the price of tissue paper and related products.
Some positive aspects

In an attempt to provide some relief to the middle class, the finance minister has proposed an increase in the tax-free income limit for individuals from Tk3 lakh to Tk3.5 lakh in the budget for the financial year 2023-24.

The rationale behind this proposal, as stated in the budget speech, is to address the decline in real income for taxpayers caused by inflation.

On the other hand, the minimum income tax amount may remain unchanged. Taxpayers in Dhaka North and South City Corporations, as well as Chattogram City Corporation areas, are required to pay an income tax of Tk5,000. Taxpayers in other city corporation areas are subject to a tax of Tk4,000, while taxpayers in other district towns and municipalities are required to pay income tax of Tk3,000.