Effect Of Vat And Tax On Economy: An Analysis In The Context Of Bangladesh

Abstract

‘VAT’ has assumed different meanings over time. Government requires enormous amount of money in the discharge of its constitutional responsibilities. Although there are many sources of such revenue, tax is an important aspect. It can affect the economy in a number of ways ranging from national and local economic growth to how individuals manage their personal finances. Although taxation itself is pervasive, whether taxes have a positive or negative effect on the general economic condition of the country is the subject of much debate. A country like Bangladesh where 31.5% (2011 est.) of its population is beyond poverty line the income tax plays relatively a small role in the country’s tax system. Thus the distributional impact of VAT is of concern. Here, in this paper we are going to focus what effects tax and VAT have in the economy of Bangladesh.

Key words: tax, vat, agricultural sector, economic impact.