The country's rubber growers, for very strange reasons, have not been receiving the right attention from the government-not only in terms of inducements but also in removing some of the impeding elements. One of the critical areas believed to deter the growth and sustenance of domestic rubber cultivation and output is discrepancy in taxes on local production of rubber and import of finished rubber. This, observers hold, has caused an uneven competition for the growers in domestic marketing as well as exporting.
In a situation of high production cost as against low import pricing, development of the rubber industry is thoroughly impractical. While ensuring a level playing-field to domestic industry by way of, among others, tariff is a prime obligation of the government. Rubber growers are reported to be currently paying a total of 24 per cent tax-- 15 per cent as value-added tax (VAT), 5.0 per cent as income tax and an additional 4.0 per cent tax for other services. On the other hand, importers are required to pay only customs duty at 5.0 per cent on import of finished product.
Customs duty on import of finished rubber was reduced to 5.0 per cent from 10 per cent in 2010 and there was no VAT and tax on local production until then. But subsequent imposition of taxes rendering production costlier has changed the entire situation, posing a serious threat to the sustenance of the domestic industry. In order to address the situation, a couple of public hearings were arranged at the Bangladesh Tariff Commission (BTC) at the initiative of the local growers' association. But nothing seemed to go in the way of easing the difficulties of the growers.
Although rubber cultivation is relatively new in Bangladesh compared to situations prevalent in many of its producing countries in the region, there has been noticeable progress here on the domestic front in this sector over the recent decades. Locally produced rubber now meets almost half of its domestic demand. Multipurpose uses of rubber in a wide range of industrial applications are a key to the growth of domestic demand. A local daily, quoting industry sources, reported that rubber production stood at 25,000 tonnes on 98,985 acres of land in the country in the fiscal year (FY), 2013-2014. The Bangladesh Forest Industries Development Corporation (BFIDC) is the largest single grower followed by the Chittagong Hill Tracts Board and a large number of small private rubber planters.
Prospect of flourishing the sector in the hands of the private planters is immense, provided the impeding elements are done away with. It is high time for the government to look into the matter of tax-related discrepancies in due recognition of the importance of the rubber sector. Industry insiders are of the view that once the disparity is removed allowing rubber production to move unhindered, the industry has the potential of both expanding and diversifying its product range. This will also help augment exports, beside meeting increasing domestic demand.
Discrepancy in taxes on rubber production and import
FE Team | Published: March 06, 2015 00:00:00 | Updated: November 30, 2026 06:01:00
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