The upcoming budget is increasing the tax burden on everyday goods: What is in store for low-income people?

❐ BD Digest Desk

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The BNP government is finalizing the budget for the 2026-27 fiscal year amid a severe economic crisis. At a time when the common people are struggling with the rising prices of daily necessities and struggling to somehow survive with increased expenses despite no increase in income, the government is moving forward with a plan to collect big revenue from a big budget.

The National Board of Revenue (NBR) has already proposed imposing additional taxes on numerous sectors, from almost all types of daily necessities including paddy, rice, wheat, pulses, potatoes, onions, to riding motorcycles and battery-powered auto-rickshaws and using mobile phones.

Businessmen and analysts are warning that if this proposal is implemented, the daily lives of ordinary people will become more difficult in the new fiscal year and spending obligations will become longer.

According to sources in the Ministry of Finance, the budget work has almost been finalized and the final review is now underway. The potential size of the budget for the upcoming fiscal year 2026-27 could be around Tk 920,000 crore, of which the NBR’s revenue collection target is set at Tk 604,000 crore.

Finance Minister Amir Khasru Mahmud Chowdhury will announce the budget in the National Parliament in the first half of June.

To achieve this huge revenue target, the NBR is going to impose taxes on essential commodities. In particular, it is proposed to increase the source tax on commissions on local bonds for the purchase of paddy, paddy husk, rice, wheat, potatoes, onions, garlic, beans, chickpeas, lentils, ginger, turmeric, dried chillies, maize, flour, salt, sugar, edible oil, nuts, dates, computers and computer parts, and all types of fruits from 0.50 percent to 1 percent, i.e., doubling the tax rate.

Not only daily necessities, but also for the first time, plans are being made to levy advance income tax on motorcycles and battery-powered autorickshaws, which are the main vehicles of the middle and lower classes. In the case of motorcycles, there is a proposal to keep them tax-free up to 110 cc. However, an advance income tax of Tk 2,000 per year has been set for motorcycles of 111 to 125 cc, Tk 5,000 for 126 to 165 cc, and Tk 10,000 for those above 165 cc.

There is a proposal to set an annual tax of Tk 5,000 in city corporation areas, Tk 2,000 in municipalities, and Tk 1,000 in unions for battery-powered autorickshaws.

Shah Md. Ashekur Rahman, Chief Marketing Officer of motorcycle company Honda, expressed concern over the proposal. According to him, the average monthly income of a person who rides a 125 cc motorcycle is around 40,000 taka, and for those who ride a motorcycle above 150 cc, it is between 50,000 and 60,000 taka.

He said that this tax is not a big deal for those who can buy a bike for six lakh taka, but it will have a negative impact on the rest of the general riders and will threaten overall sales.

At the same time, the government is planning to provide concessional benefits on the import of raw materials for essential products for daily use and security, such as mobile phones, air conditioners, refrigerators, LED and energy-saving lights, CCTV cameras, and ATM machines.

As a result, the prices of these products will also increase. In the case of gold, the NBR has recommended imposing a new VAT of Tk 5,000 per ton, in addition to the current 5 percent VAT.

The pressure on the middle class is also increasing in the area of ​​income tax. As a result of the change in the slab and increase in the tax rate, someone with an annual income of 720,000 taka will now have to pay 10,500 taka instead of 8,000 taka.

Advocate Ashraf Hossain Khan, General Secretary of the Dhaka Taxes Bar Association, has demanded that the tax-free income limit be increased from Tk 3.75 lakh to Tk 5 lakh in this situation.

According to him, this decision is the need of the hour, keeping in mind the global economic situation and the country’s high inflation. On the other hand, despite many demands to reduce the corporate tax rate, it is not being reduced either.

Additional taxes are also being imposed on the rich. The new budget plans to impose a market-based wealth tax on assets worth more than 4 crore taka. The tax will be levied at a rate of 0.50 percent on assets worth more than 4 crore but less than 10 crore taka, 1 percent on assets worth 10 to 20 crore taka, 1.50 percent on assets worth 20 to 50 crore taka, and 2 percent on assets worth more than 50 crore taka. However, it has been said that this tax will not be more than the tax paid by the taxpayer in any way.

The export sector is also being hit. The government is on the path of increasing the current 10 percent source tax to 20 percent in return for export incentives in the ready-made garments, leather, jute, agricultural products, and information technology sectors.

BKMEA Executive President Fazle Shamim Ehsan strongly criticized the proposal, saying that incentives mean subsidies, and there is no question of profit.

According to him, such steps should be avoided to sustain the country’s textile sector.

Meanwhile, the current inflation situation is already worrying. According to the Bangladesh Bureau of Statistics, inflation rose from 8.71 percent in March to 9.04 percent in April. There is a fear that this situation will worsen due to the impact of the global war.

SM Nazer Hossain, vice president of the Consumer Association of Bangladesh, directly said that if taxes on products are increased, prices will increase, because traders never pay taxes from their own pockets, the burden ultimately falls on the consumer.

His suggestion is that before increasing tax rates, the ongoing revenue evasion in various sectors should be stopped. Because if evasion is stopped, revenue collection will increase significantly. And if tax rates are increased, there is a risk that the money will go into other people’s pockets instead of going to the state treasury.

However, there is a positive side to this whole picture. Prime Minister Tarique Rahman held detailed discussions with top officials, including the Finance Minister, the Prime Minister’s Finance and Planning Advisor, the Finance Secretary, and the NBR Chairman, in a long meeting from 10 am to 6 pm on Thursday.

According to sources at the meeting, he instructed not to impose additional tax burden on the common people and suggested controlling inflation and formulating a budget that is pro-business.

He has ordered a further review of the issue, fearing that doubling the source tax on daily necessities could further increase inflation. While giving in-principle approval to the proposal to impose tax on motorcycles and battery-powered auto-rickshaws, he has asked for the proposed tax rate to be reduced.

He also ordered a reconsideration of the proposal to increase customs duty on the import of mobile phones, refrigerators, ACs and CCTV camera components. He also suggested reducing the proposal to impose VAT of Tk 5,000 per ton on gold.

On the other hand, he is reported to have expressed satisfaction with the proposal to increase the price of cigarettes, exempt VAT on heart rings and dialysis tubes, and increase the excise duty limit from 3 lakh to 5 lakh.

In the overall situation, the question arises as to how consistent the plan to increase taxes in numerous sectors, including daily necessities, is, on the one hand, by announcing the goal of controlling inflation, and on the other.

Experts believe that it is difficult to achieve these two goals simultaneously and we will have to wait until June to see how much relief the final budget actually brings to the common man.