Bangladesh diesel taxes compound inflation concerns

Bangladesh collects Tk35.82 (approximately $0.29) in taxes and duties on each liter of diesel priced at Tk135 (approximately $1.10), prompting concerns about pressure on consumers and businesses, The Business Standard reported Thursday.

A June 2025 policy change replaced fixed fuel taxes with a 25% levy on import invoice values, increasing government collections when international prices rise.

Economists warn that higher diesel costs increase transportation, irrigation, and manufacturing expenses, adding to inflation.

Bangladesh Petroleum Corporation (BPC) proposed restoring fixed taxation or lowering rates at a parliamentary committee meeting Sept. 29.

Fahmida Khatun, distinguished fellow at the Centre for Policy Dialogue, recommended targeted subsidies for low-income households, small businesses, and farmers.

An interest-free government loan has eased BPC’s immediate financing needs, but its tax reform proposals remain unresolved.