Increased duties and taxes likely to raise costs for consumers

B Mirror Desk:

Finance Minister Abul Hasan Mahmood Ali has presented the proposed budget for the financial year 2024-25, which outlines several changes in duty and tax structures expected to impact the prices of various goods and services. Analysis of the budget details reveals a broad range of items likely to see price increases, affecting everyday expenses for consumers.

As part of the new budget, supplementary duties and pricing levels for cigarettes are expected to rise at the manufacturing stage, continuing a trend seen in previous years. A supplementary duty of 65.5 percent has been proposed on three-tier cigarettes, which will likely lead to higher prices for all cigarette types. Additionally, the maximum retail price for 10 grams of zarda has been proposed at Tk 48 and the same amount of gul at Tk 25, increasing costs for those who consume pan-zarda.

The budget proposes an increase in import duty on household water filters from 10 percent to 15 percent to support domestic production, likely leading to higher prices for these filters. LED bulbs and energy-saving bulbs, commonly used to reduce electricity bills, may also become more expensive due to a proposed 10 percent increase in import duty.

In an effort to protect local cashew nut cultivation, import duty on shelled cashew nuts is proposed to be raised from 5 percent to 10 percent, potentially increasing the price of imported cashews. Similarly, duties and VAT are set to rise on compressors and materials used in the production of fridges and air conditioners, which could lead to higher prices for these appliances. Duties on imports related to vehicle conversion to CNG-LPG and materials used in generator assembly and manufacture are also expected to increase, raising conversion and generator costs.

The proposed budget includes a 1 percent duty on raw materials for 33 industrial items, such as crude edible oil, materials for producing sandpaper, artificial corundum, aluminium oxide for PAT chips, aluminium ingots for water motors, and fluorescent lamp parts. This could result in higher costs for industries dependent on these materials.

For economic zones and hi-tech parks, the current exemption on capital parts and construction materials is set to be withdrawn, and a 1 percent duty will be imposed. Additional duties, including VAT, supplementary duties, and regulatory duties, will now apply to developers and companies in these zones. Furthermore, the option to import cars duty-free for economic zone establishments is proposed to be cancelled, further increasing costs for companies.

The budget proposes removing the current tax exemption for tour operator services and doubling the VAT on amusement and theme parks from 7.5 percent to 15 percent, potentially raising leisure costs. Auctioneers, security services, and lottery ticket vendors may see their tax rates increase from 10 percent to 15 percent. Specific taxes on bricks could also rise from 10 to 20 percent, impacting construction expenses. VAT on ice cream and carbonated beverages is set to increase, likely raising their prices.

Mobile phone services are expected to become more expensive as supplementary duty on SIM-related services is proposed to increase by 5 percent to 20 percent. Additionally, the fee for supplying e-SIMs may rise from Tk 200 to Tk 300.

Medical devices and equipment currently allowed for import at 1 percent duty under duty-free facilities for specialized hospitals may see this rate increased to 10 percent if more than 200 items are imported, potentially raising treatment costs for critically ill patients.