The Bangladesh Tariff Commission (BTC) has suggested raising the number of tariff slabs to seven from the existing five to make it time-befitting and consistent with the practices in neighbouring countries, officials have said.
But the proposal was greeted with strong opposition from the country's business community as well as other government bodies.
On request of the ministry of commerce (MoC), the BTC recently conducted a study on "making tariff slabs further time-bound". In the study it suggested introduction of two more duty slabs.
Presently, import duties are being charged under five slabs-0, 2.0, 5.0, 10 and 25 per cent. The BTC has suggested introduction of two more slabs-13 per cent and 18 per cent.
Under the two new slabs, it suggested, duties should be imposed on use of locally-produced intermediate raw materials and commercial import of intermediate raw materials respectively. Presently the duty on import of intermediate raw materials is 10 per cent.
Justifying its proposal for introduction of the two new slabs the BTC said the local producers of intermediate goods were pleading for realisation of the higher duty from importers of such items. But the local producers were also failing to provide adequate intermediate goods to factory owners or charging high prices.
So, the BTC suggested two separate duty slabs on locally-produced intermediate raw materials and commercially-imported intermediate raw materials, officials said.
While studying the duty slabs of the fiscal years (FYs) 2000-2001 to 2014-2015 the BTC team found that there were five slabs during the period barring four only in two FYs.
It has said Nepal has seven duty slabs with the highest duty set at 80 per cent, India has 23 duty slabs ranging from zero to 150 per cent, Pakistan has 16 duty slabs with the highest one set at 100 per cent, China has 55 duty slabs ranging from zero per cent to 20 per cent and the United States of America has 155 duty slabs.
The study says Bangladesh has 6,512 tariff lines, Nepal has 5,345, Sri Lanka 6,520, India 11,472, Pakistan 7,016, China 8,243 and the USA 11,440.
The study has also suggested raising the tariff lines to raise the number of tariff slabs, since it is lower in Bangladesh than in any other country.
Sources said the BTC sought opinions from 19 stakeholders, including ministries, government departments, trade bodies and private sector think-tanks.
Ali Ahmed, chief executive officer of Bangladesh Foreign Trade Institute (BFTI), an organisation under the MoC, in his opinion suggested taking into account the government's effort to reduce the number of duty slabs.
"…it may be recalled that over the last 25 years the government has been making efforts to rationalise the tariff structure by reducing the number of slabs with a view to reducing or eliminating malpractices aided by different tariff structures on similar products."
When contacted, Federation of Bangladesh Chambers of Commerce and Industry adviser Manzur Ahmed told the FE that businesses had been demanding a cut in the number of tariff slabs and the government had been trying to do it for long.
"We sought a cut in the number of tariff slabs to three but later requested the authorities to keep it at five as it exists considering the possible implications for the industrial sector, especially for intermediate goods," he said.
Terming the proposal for raising tariff slabs 'outdated thinking', he said steps should be there to avoid any tariff escalation.
"We are looking into the BTC study and will soon send our opinions opposing the move of raising the number of slabs," he said.
Centre for Policy Dialogue (CPD) Executive Director Prof Mustafizur Rahman told the FE his organisation had advocated rationalising the number of duty slabs which later was brought down to five from twenty.
He said when tariff slabs are high in number, there remains scope of misinterpreting them and taking the advantage of it for malpractice.
"Our tariff structure has become complicated because of the imposition of supplementary and other duties. I am not sure what benefit the increase of tariff slabs will bring," Mr Rahman said.
He, however, said if the tariff slabs were increased by reducing the additional duties, it would not create any problem.
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