Govt plans to cut taxes on solar lantern, equipment
Friday, 6 May 2011
FE Report
The government has planned to cut taxes on solar energy equipment and lantern to boost use of renewable energy in the country, an official said Thursday. The cut is aimed at reducing the prices of solar-powered lights, lantern and equipment and make them popular among the country's millions of rural people --- majority of whom don't have access to grid power. A senior revenue official said the tax cut would be announced in the next budget to be placed by finance minister AMA Muhith on June 9. "We will consider offering a special tax reduction on solar energy in the next budget. The cut will make solar-powered equipment more affordable," he told the FE. He said the move follows a formal proposal from the power and energy ministry, which has pointed out heavy tax burden as a key barrier to popularise solar-powered lantern among the poor and low income people. Currently, only solar panels enjoy tax benefits. But other items such as solar-powered lamps, lanterns, vehicles or fans are taxed heavily. A trader has to pay 142.2 per cent duty to import solar lantern in the country. The tax rate includes 25 per cent customs duty, 60 per cent supplementary duty, 15 per cent value added tax, three per cent advance income tax and three per cent advance trade VAT. A LED solar lantern, which is not manufactured in the country, costs more than Tk 5,000 in Bangladesh because of the heavy tax burden, the power and energy ministry said in its proposal. Under a pilot project, the power ministry has planned to distribute 5,000 such solar lanterns among rural poor. It wants to see how much impact the lantern makes in a rural household. "The pilot programme has been taken to develop the lifestyle of ultra-poor. They will get access to power with the programme," the power ministry said in the letter. The National Board of Revenue also received a raft of proposals from energy and power ministry to reduce taxes on other solar-powered lamps and equipment, the NBR official said. "They said cost of solar items cannot be reduced drastically if the existing tax burden remains. We have examined the proposals and have now planned to offer special tax cut on these products," he added. The number of solar powered households has doubled to around 800,000 last year thanks to efforts by a string of local charities who get easy refinancing benefits to sell solar household systems to rural people. Officials of Grameen Shakti, the leading charity behind the country's solar drive, have said recently at least five million rural households could be lighted by solar power by 2015 if the taxes on the renewable energy is cut deeply.
The government has planned to cut taxes on solar energy equipment and lantern to boost use of renewable energy in the country, an official said Thursday. The cut is aimed at reducing the prices of solar-powered lights, lantern and equipment and make them popular among the country's millions of rural people --- majority of whom don't have access to grid power. A senior revenue official said the tax cut would be announced in the next budget to be placed by finance minister AMA Muhith on June 9. "We will consider offering a special tax reduction on solar energy in the next budget. The cut will make solar-powered equipment more affordable," he told the FE. He said the move follows a formal proposal from the power and energy ministry, which has pointed out heavy tax burden as a key barrier to popularise solar-powered lantern among the poor and low income people. Currently, only solar panels enjoy tax benefits. But other items such as solar-powered lamps, lanterns, vehicles or fans are taxed heavily. A trader has to pay 142.2 per cent duty to import solar lantern in the country. The tax rate includes 25 per cent customs duty, 60 per cent supplementary duty, 15 per cent value added tax, three per cent advance income tax and three per cent advance trade VAT. A LED solar lantern, which is not manufactured in the country, costs more than Tk 5,000 in Bangladesh because of the heavy tax burden, the power and energy ministry said in its proposal. Under a pilot project, the power ministry has planned to distribute 5,000 such solar lanterns among rural poor. It wants to see how much impact the lantern makes in a rural household. "The pilot programme has been taken to develop the lifestyle of ultra-poor. They will get access to power with the programme," the power ministry said in the letter. The National Board of Revenue also received a raft of proposals from energy and power ministry to reduce taxes on other solar-powered lamps and equipment, the NBR official said. "They said cost of solar items cannot be reduced drastically if the existing tax burden remains. We have examined the proposals and have now planned to offer special tax cut on these products," he added. The number of solar powered households has doubled to around 800,000 last year thanks to efforts by a string of local charities who get easy refinancing benefits to sell solar household systems to rural people. Officials of Grameen Shakti, the leading charity behind the country's solar drive, have said recently at least five million rural households could be lighted by solar power by 2015 if the taxes on the renewable energy is cut deeply.