VAT hike won’t affect daily essentials, assures Economic Advisor

In a recent statement, Economic Advisor Salehuddin Ahmed addressed concerns about the government‍‍`s decision to raise VAT, assuring the public that essential goods will not be impacted. 

Speaking after a meeting of the Advisory Council on Procurement at the Secretariat on Thursday, he provided reassurance that the new VAT increase will not make daily items more expensive.

Salehuddin Ahmed clarified that the VAT hike would primarily apply to three-star hotels. When asked about its broader impact, he emphasized that the economy, including the banking sector, is expected to recover and stabilize in the upcoming fiscal year. 

While airfares might see a slight increase, he pointed out that they would still remain cheaper compared to other countries.

The Economic Advisor also assured the public that the government would not cut funding for vital sectors like education, healthcare, and information technology. 

Instead, these sectors are likely to receive even higher budget allocations.

“Imposing a 15% VAT on 43 types of products and services, including three-star restaurants, will not affect the prices of everyday goods,” Salehuddin Ahmed said. 

“The impact on prices will be minimal, as we have already reduced customs duties to almost zero.”

He also explained that the small increase in VAT on airfares was necessary because fares are still relatively low compared to other nations. 

While the government plans to increase investments in key sectors like education and healthcare, the focus is also on improving the country‍‍`s revenue collection, which remains lower than expected.

In conclusion, the Economic Advisor noted that raising income tax or corporate tax abruptly was not a viable option at this time, which is why the VAT increase was introduced after thorough consideration.