Govt mulls seasonal taxing of essentials

Now the government mulls over introduction of 'seasonal tariffs' on import of agricultural commodities to ensure fair prices to the farmers and tame the sky-rocketing prices at the consumer end.
The Ministry of Agriculture (MoA) would prepare product-wise calendar on production and supply of agricultural produce for implementing the tariff structure by tax authority through flexible taxing.
On the basis of the calendar, Bangladesh Trade and Tariff Commission (BTTC) would prepare a report determining the methods of seasonal- tariff implementation.
The decision to explore the possibility of this new type of tariffs has been taken at a recent meeting, chaired by Senior Secretary of the MoC Tapan Kanti Ghosh, at a time when market prices mostly defy government interventions so far.
The move came following recommendations of BTTC that suggested considering seasonal tariff aligned with harvesting time of agricultural produce.
However, economists find seasonal tariffs less effective unless the government pay attention to market monitoring to break 'syndicates', blamed for creating such agflation.
Chairman of the Research and Policy Integration for Development (RAPID) Dr Mohammad Abdur Razzaque said the seasonal-tariff system has not been successful in other countries, and not a good idea, too.
"Market management is important to rein in the prices of essential commodities. The government will have to build a data bank of essential commodity supply to take proper decision," he says.
Seasonal tariff means import tax would be imposed on the commodities having local production in the harvesting season while waived when the particular product would not be available on the market due to end of its season.
The tariffs would be fixed at the beginning of a year on the basis of harvesting calendar of agricultural products.
It has been found that decision on tariff cut to tame prices of commodities needs a long procedure in the bureaucratic system, resulting in less benefit to the consumers as well as affecting farmers in a double disservice.
A senior MoC official says tax- cut decision takes a long period and by that time harvesting season again resumes. "Consumers hardly get the benefits of tax cuts due to multitudes of factors, apart from profit- maximization tactics of businesses."
He says seasonal tariff can help predictability of commodity prices in the local market before or after tax cut.
The BTTC has also recommended framing a policy guideline to rein in the prices of essential commodities.
Off-season and peak-season have to be considered at the time of imposition and withdrawal of tariffs.
A BTTC report has said annual demand for onions is 2.6 million tonnes followed by Ginger 0.5 million tonnes, garlic 0.6 tonnes, potatoes 9.1 tonnes, green chili 1.5 tonnes.
Until September 19, 2023, the country's farmers had produced 3.3 million tonnes of onions, 0.1 million tonnes of ginger, 0.6 million tonnes of garlic, 11.2 million tonnes of potatoes and 1.4 million tonnes of green chilis.
Import taxes on onion, garlic, ginger is 10 per cent followed by potatoes 33 per cent, green chilies 58.60 per cent and eggs 33 per cent (with the approval of MoC).
The BTTC report has found no valid reason for price hike of potatoes and eggs in the local market in recent times.
Earlier in 2020, the government had set a selling price of potatoes as per Agricultural Marketing Act-2018 following its abnormal prices escalation.
According to the Directorate of Consumers Rights Protection, prices of potatoes on the wholesale market was Tk 33.84 per kilogram that jumped to Tk 42 on September 11, 2023.Now potatoes are selling at Tk 50 per KG at retail markets.
Bangladesh mainly imports onion from India that imposed 40 per cent duties on export, making it costlier.
The BTTC has recommended that the MoA pay attention to preservation of agriculture produce, onions, ginger and garlic to support crisis period.
For potatoes, it has recommended ensuring issuance of valid invoice on every stage of its supply to rein in its prices.

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