Let consumers enjoy benefits of import-tax cut

FE Team | Published: February 13, 2024 21:26:24

From the recent media reports, it appears, the government's pre-Ramadan move to arrest further hike in prices of key essentials through drastic cuts on import duty and Value-Added Tax (VAT) have left no visible impact on the market. What shocked the regular market-goers, as reported, is that rather than falling or at least remaining stable, prices of the essentials in question are rising. This defies common sense. Notably, the tax regulator, the National Board of Revenue (NBR), recently slashed import duties and VAT on four essential commodities, namely, rice, edible oil, sugar and date. Earlier, importers of rice, for instance, had to pay 63 per cent tax including VAT on the item. But following the NBR's recent order, the Total Tax Incidence (TTI) on the item has come down to15 per cent. Import duty on sugar, for instance, has been reduced by Tk500 per tonne, while import duty on edible oils has been cut by 5.0 percentage points (from 15 per cent to 10 per cent) and the 15 per cent VAT on them has been completely withdrawn.
But as reported in the February 12's issue of this paper, the essentials including sugar, coarse and medium rice, loose soybean and palm oils, onions, eggs, chicken and vegetables showed no sign of arresting the rising trend of their prices. Worse yet, price rise of loose palm and soybean oils in the major wholesale markets following the stated NBR measure is baffling. One explanation for this strange market behaviour might be that, as some wholesalers pointed out, before the imported essential commodities under the new tax rules reach the country, the tax benefit will not reflect in price lines. Some other dealers in the essential commodities, on the other hand, even questioned the government's wisdom of going for import, say, of rice, at a time when it's getting pricier in the world market. The bigger question is, if the government's aim was to supply essential commodities at affordable prices to the common consumers, then has the NBR's recent tax cut measures been able to deliver so far?
In fact, the unrestrained price hike has forced the fixed and low income people to skimp on food and other necessities. Just to make ends meet, they are buying less amounts of these food items even to the detriment of the physical wellbeing of both the adult members and children of their families. This needs serious attention from the authorities concerned. Understandably, unprecedented fuel tariff hike effected by the government two years ago (in June and August of 2022) had its irreversible impact by way of raising the prices of all kinds of commodities and services in the market. Add to that the ever-falling value of the domestic currency, taka, against US dollar and, not to mention, the behaviour of the essentials market, which some, including the government, would like to attribute to the manipulators, the so-called syndicates. Whatever the reason, even after a series of government measures in the form of tax and duty cuts on imports and mounting of mobile courts to monitor markets and take penal measures against errant traders found hoarding essential commodities or raising their prices artificially, nothing changed for the better.
Under the circumstances, the government's primary focus should be on reaching the benefits of tax cuts on import of essentials to the common consumers. To that end, if necessary, all duties on essential imports may be withdrawn. At the same time, stricter monitoring of market should continue as usual.