The recent hike in value-added tax (VAT) and supplementary duty (SD) rates will not have any significant effect on the prices of goods, said Finance Adviser Salehuddin Ahmed yesterday.

"What is the worst that could happen?" he told journalists after a meeting of the Advisers' Council Committee on Government Purchase at the Bangladesh Secretariat.

The National Board of Revenue (NBR) increased VAT and SD on nearly 100 goods and services on January 9, leading to apprehensions that it would stoke inflation, put further strain on consumers' wallets, and slow down businesses.

The NBR raised the indirect taxes at a time when overall revenue collection fell by 2.62 percent in the July–November period, increasing pressure on the government to borrow from domestic and foreign sources.

The VAT increase also aligns with the recommendations of the International Monetary Fund (IMF) as part of a $4.7 billion loan it approved for Bangladesh in January 2023.

Regarding the criticisms of economists, Ahmed said, "Let critics say what they want. There's no reason to stop them. The rationale behind this VAT hike will be explained in due time."

Tax and VAT adjustments are typically made during the formulation of the national budget, and various measures will be adopted in the budget this year to ensure conformity with the hikes, he said.

While the VAT rates have been raised, certain customs duties have been reduced to achieve a balance, he said.

The Advisers' Council Committee on Government Purchase yesterday gave retrospective approval to an Open Market Sale (OMS) initiative run by the Department of Agricultural Marketing last December.

Under the initiative, 10 agricultural products such as potatoes, eggs, onions, raw papaya, and various green vegetables were sold at subsidised prices through trucks around the capital.

Over 8 lakh people have benefited from this special OMS initiative, and it will be run again if the need arises, said Ahmed.

Regarding the rising prices of rice, the finance adviser blamed the malpractices of wholesale and retail traders, pointing out that there was no supply shortage.

He assured that efforts were underway to make essential food commodity prices more affordable and emphasised that the prices of most items were relatively stable.

In the meeting, the Advisers' Council Committee also approved the purchase of 1.5 lakh tonnes of different fertilisers.