Apparel bodies for withdrawal of 1.0pc tax at source

Strongly opposing the government's proposal to increase tax at source on export proceeds, the leaders of the country's apparel and textile sectors Friday demanded withdrawal of the same.
They apprehend that the rise in tax at source will further slow down exports as the production cost will go up and the highest foreign currency earner will lose global competition.
The business leaders also demanded that the government should keep imposing existing 0.30 per cent tax at source.
In his budget speech on Thursday, the finance minister proposed increasing source tax to 1.0 per cent for the next fiscal year (FY) 2015-16.
Hailing the national budget, the business leaders said although the proposed budget is business-friendly, but it is not congenial for textile and garment sectors.
"The government has surprisingly proposed a 233 per cent hike in tax at source that will adversely affect knit and woven sectors," President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) Md Atiqul Islam said while addressing a post-budget briefing at its headquarters in the city.
After paying all taxes, a factory's profit margin lies between 2 per cent and 3 per cent if there is no obstacle like political turmoil whereas tax at source has been fixed at 1 per cent, he added.
The briefing was jointly organised by BGMEA, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA).
BTMA President Tapan Chowdhury, BKMEA President AKM Salim Osman and President of Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAP) Rafez Alam Chowdhury, among others, also spoke.
Elaborating the increased cost of production, Mr Islam said the production cost has gone up by 10 per cent recently compared to that of 2013 with 15 per cent hike in wages and 10 per cent in utility services, including gas and electricity.
Moreover, a factory, on an average, needs to pay Tk 50 million to meet structural, fire and electrical safety requirements in line with the requirements of Accord and Alliance, he noted.
The BTMA President said Bangladesh is globally recognised for its RMG sector and it has been passing a crucial time for the last two years mainly over workplace safety and compliance issues.
"It is not true that we don't want to pay tax," he said and sought government's support to overcome the ongoing challenges. Competitors are taking away the advantages, he observed.
Admitting the government's support to the sector, the BGMEA chief said the sector has also done a lot.
"We have created employment opportunities for four million workers, mostly women and helped flourish backward and forward linkage industries and service sectors," he said, adding that 50 million more people are indirectly involved with the sector.
"If the government re-fixes source tax at 0.30 per cent, we promise that we will create more employment scopes and help Bangladesh achieve a middle-income country," he said.  
He, however, criticised the proposal to impose 1 per cent duty on import of capital machinery for the apparel industry, saying that it would discourage expansion and diversification and slow down productivity.
    munni_fe@yahoo.com