Bread and biscuits - once considered snacks or supplements to main meals -have become essential daily food items for Bangladesh’s low-income population. A new survey reveals that 88% of economically vulnerable individuals consume these items at least once every day, raising urgent concerns about food security, affordability, and the impact of tax policy on the most marginalized sections of society.
These findings were presented at a seminar titled “Food Security and VAT for Marginalized Populations,” organized by the Economic Reporters Forum (ERF) and the Youth Policy Network at the ERF auditorium in Dhaka’s Paltan area on Thursday.
The study, based on a March 2025 survey of 1,022 people from 15 locations across the country, paints a stark picture of dietary struggles amid rising inflation, unemployment, and widening income inequality. The results highlight an unsettling trend - more than 99% of respondents have had to skip at least one full meal during the day, typically lunch or afternoon meals, replacing them with low-cost items like bread, biscuits, or bananas.
A Nation’s Diet Shift: From Rice Plates to Biscuits: According to the research presented by Imrul Hasan, Head of Research at the Youth Policy Network, bread and biscuits have become staples rather than occasional snacks for a large segment of the working class. Particularly among people earning Tk 10,000 to Tk 15,000 per month, nearly 60% skip breakfast daily - not out of habit, but due to time constraints and rising food prices.
“This isn’t just about nutrition - it’s about dignity and survival,” Hasan stated. “When low-income people are relying on processed food for basic sustenance, it reflects a deeper systemic failure in ensuring food security.”
VAT Increase: Small Percent, Big Impact: Despite their essential role in daily sustenance for low-income groups, bread and biscuit prices are set to rise further due to the government’s decision to increase Value Added Tax (VAT) on these products from 5% to 7.5% in the 2025-26 national budget.
Critics argue that such taxation on staple processed food disproportionately affects the poor. As Hasan noted in his presentation, “Inflation remains above 9%, youth unemployment is high, and yet we see the government increasing VAT on products that are now core components of the poor’s daily diet.”
A staggering 70% of survey respondents had expected that the budget would provide some form of tax relief on essential low-cost food items like bread and biscuits. Instead, the decision to increase VAT has fueled public concern and industry backlash.
NBR Chairman Defends VAT Decision, Points to Budget Constraints: Present as Chief Guest, NBR Chairman Md. Abdur Rahman Khan addressed the growing criticism, saying that while the concerns are valid, VAT decisions are not made in isolation.
“There is always a fundamental debate about whether items like bread and biscuits should be taxed at all,” he admitted. “But as a state, we also have to consider revenue targets, development goals, and international commitments - especially with our transition from an LDC (Least Developed Country) to a developing nation next year.”
Khan emphasized that the country must undergo structural reforms, including tariff reduction, to align with global trade norms and development partners’ expectations. “We cannot fund the national budget without sufficient tax revenue. If VAT isn’t collected here, it must be collected somewhere else.”
He also warned that although VAT on bread and biscuits has increased, authorities must monitor whether traders are unfairly transferring the entire tax burden to consumers rather than absorbing part of the cost themselves.
Industry Responds:’We Proposed 3%, Not 7.5%’: Shafiqur Rahman Bhuiyan, President of the Bangladesh Biscuit and Bread Association, strongly criticized the VAT hike.
“These are not luxury items; these are basic foods,” he said. “We had proposed a 3% VAT rate in our discussions with the government and even received support from the FBCCI (Federation of Bangladesh Chambers of Commerce and Industry). But instead of reducing the burden, it was increased.”
Bhuiyan warned that the cost hike could reduce consumption, disrupt small bakeries, and hurt an industry that employs thousands. “We don’t want to pass the burden to consumers, but many small manufacturers have no choice. Prices of raw materials like flour, sugar, oil, and packaging have already gone up.”
Policymakers Caught in Fiscal Crossfire: In his remarks, NBR Chairman Khan revealed that revenue collection for the current fiscal year has reached Tk 3.53 lakh crore, with significant improvements in online tax return submissions - from 500,000 returns last year to over 1.7 million this year.
To streamline administrative processes and boost efficiency, the government plans to launch a’National Single Window’ for all trade-related permits and licenses across 19 organizations. Khan emphasized that increasing the tax base and easing business operations are both key to avoiding overly regressive taxation on food.
However, he admitted that internal unrest within the National Board of Revenue (NBR) is slowing down progress. “Some movements and discontent among employees are affecting revenue work. We must prioritize national interest above all else,” he urged.
Wider Implications for Food Security: Partha Shankar Saha, Assistant News Editor at Prothom Alo, and several other speakers highlighted how taxation policy must align with social protection goals. “When the state taxes food that poor people rely on for daily energy, it’s effectively taxing poverty,” said Saha.
He and other panelists called on the government to rethink VAT policy on essential food products, suggesting that taxing luxury consumption or speculative real estate could offset the revenue loss from VAT exemptions on staple foods.
The survey results and seminar discussion also expose the increasing dependency on processed food among low-income households. Nutritionists warn that while bread and biscuits offer quick energy, their nutritional value is limited. Long-term dependency can lead to malnutrition, especially among children.
A Wake-Up Call for Policymakers: ERF President Daulat Akhter Mala delivered the welcome address and stressed the need for inclusive policymaking. “We often frame budgets around infrastructure and macroeconomic growth, but overlook how small changes - like a 2.5% VAT increase - affect millions at the grassroots.”
The Youth Policy Network’s study, combined with on-the-ground insights from businesses and journalists, serves as a powerful reminder that economic policy must reflect lived realities. With bread and biscuits now the daily sustenance for the country’s poorest, decisions about their pricing and taxation must be approached with sensitivity and foresight.
Final Thoughts: The VAT increase on bread and biscuits may seem minor in fiscal terms but is monumental in its social impact. For Bangladesh’s working poor - many of whom eat no more than two light meals per day - affordability of these basic processed foods is not a question of comfort but of survival.
As the nation prepares for structural economic transitions, including LDC graduation and global market integration, balancing fiscal responsibility with food affordability will remain a key test of policy maturity. If policymakers truly aim to build a just and inclusive economy, then the simple loaf of bread or packet of biscuits - eaten by 88% of the country’s poorest every day - must not be ignored at the budget table.
