People face double whammy of budget, gas price hike

Additional tax and VAT imposed in the national budget coupled with the latest hike in gas price is feared to result in a Taka 2,000-3,000 rise in the monthly living cost of a low or middle-income family.

The national budget for fiscal year (FY) 2019-20 effective from July 1 has imposed extra import duty and VAT on some essential commodities which include soybean oil, mobile phone talk time, spices and so on.

Meanwhile, the Bangladesh Energy Regulatory Commission (BERC) on Sunday announced an overall 32.8 percent hike in gas prices, also effective from yesterday. The price of gas for household users has increased by Tk175. For compressed natural gas (CNG), the hike is 9.38 percent, which will push up the transportation cost.

People are thinking of curbing family expenditures to deal with the rising costs of essential products and services resulted in by additional tax and VAT and gas price hike. Especially, they are to compromise with the budget for food and clothing.

“The budget and gas price hike have caused a double blow to my family budget,” said one Enamul Haque who works for a private company.

‘’As currently I don’t have any opportunity to increase my income, I need to revise my family budget to deal with the surges in prices of some of the most essential commodities and services,’’ he added.

Additional Tk100-150 for oil

Mr Enamul has given a picture of his family budget. His 5-member family consumes 7 litres of soybean oil each month, costing around Tk1,050-1,100.

The FY20 budget has proposed imposition of around 15 percent taxes including advance tax, advance income tax and VAT at the processing level.

In addition, about 45 percent hike in the price of gas used by oil refineries will add an additional cost between 50 paisa to 1 taka to per litre of soybean oil.

Fakrul Alam, president of Malaysian Palm Oil Council Bangladesh, said price of soyabean oil may rise by 15 to 20 percent as an impact of the budget and gas price hike.

In this line, Mr Enamul needs an additional Tk150-200, if he is to sustain the present volume of his monthly family oil consumption.

Tk150-200 for mobile bill

Previously, on every Tk100 phone recharge, consumers used to get talk time worth Tk78 and the rest 22 taka would go to the government fund. But now, if a consumer recharges his phone with Tk100, the talk time marginally dips to Tk73 the rest 27 goes to the government exchequer as the government has imposed an additional 5 percent tax on talk time.

So, for this purpose, Mr Enamul who’s monthly mobile phone usage previously coted around Tk2,000 will now have to shell out an additional Tk200.

Tk20-30 for sugar

Mr Enamul’s family consumes 6 to 8 kilograms of sugar every month. The price of a kilogram of sugar has already witnessed a rise by Tk3-4. The additional gas price will push up the price of sugar for another time. 

Tk150-200 for baby food

Mr Enamul feeds imported powdered milk to his 2-year-old baby, which cost him Tk3, 500 every month. Due to the imposition of additional 5 percent import duty on the product, he will now have to spend Tk3,650-3,700 per month for the same purpose.

Tk175 for cooking

People cannot be spared only purchasing essential commodities with additional prices but now they will have to count extra Tk175 to buy gas for cooking those commodities.

Tk800-1,000 for transportation

People who uses CNG-run auto-rickshaw or private car for transportation will now have to expend an additional 10 to 20 percent for transportation following the 9.38 percent hike in price of CNG.

And, Mr Enamul who uses CNG-run auto-rickshaw on an average 20 days a month to go to his office and return home. He has to spent Tk250-300 for daily transportation through CNG.

The gas price hike is likely to push up his daily transport cost by Tk40-60, which will cost him Tk800-1000 per month for the same purpose.

In addition, spices, cake and biscuits, fruit juice, ice cream, dress and smartphones are subject to increased taxes on different levels ranging from 5 to 20 percent. The increased prices of these commodities will also contribute to expense escalation of the people like Mr Enamul.

Besides, retailers and wholesalers previously used to give a package VAT to the government. They did not collect any VAT from their customers for that purpose. 

However, the new budget has imposed a 4 percent transaction tax on daily sale to the tune of at least Tk20, 000. So now, this business people will collect the 4 percent VAT from their clients. This will extract more money from the pocket of people like Mr Enamul.

Moreover, the price of yarn has already gone up by Tk6-8 per kg. When the fabrics and dresses made from yearn will appear in a brand shop, an additional 3 percent VAT will add to this. Ultimately, consumers will have to bear those additional costs. That is, consumers will have to pay more to buy a dress than earlier.

Mr Enamul said, “To strike a balance between the increased expenditures and my income, I think to buy lower grade rice for Tk45-50 per kilogram instead of spending Tk60 to 64 for per kilogram of finer varieties of the product.”

“I will also try to bring down the monthly oil consumption of my family to 4-5 kilogram from the present 7 kilograms,” he said.

“It is expected that the living standard of the country’s people will improve in line with ever increasing growth of gross domestic product (GDP) and simultaneous rise in the people’s per capita income. But the reality is different. Our living standard is going down gradually.” he observed.