Keep ‘0.5pc source tax to remain competitive’

Bangladesh Garment Manufacturers and Expo-rters Association (BGMEA) president Faruque Hassan says it is the discretion of the government whether to bring back the swindled money.
The just-announced fiscal year 2022-23 national budget offers amnesty to launderers who can bring their money back home in exchange of a 10-15 per cent tax.
However, the proposal has drawn a lot of flak from different quarters.
"The repatriation of laundered money, Mr Hassan says the government will make a right decision in bringing the money back home," he said in reply to a query at a press meet on Monday.
Bangladesh needs adequate foreign currency to meet the current demand for greenback at home in the wake of the going global inflationary pressure.
Apparel leaders urge the government to continue the current 0.5-per cent source tax to help the industry sustain competitiveness and create more jobs amid an inflation-fuelled sluggish global demand.
They also demand 10-per cent cash incentive to encourage investment and increase export of non-cotton and man-made fibre-based products.
The Russia-Ukraine war raises food and fuel prices while a recession looms in major destinations like the European Union, says Bangladesh Garment Manu-facturers and Exporters Association (BGMEA) president Faruque Hassan.
Inflation is running higher in the US and the EU that has forced them to increase interest rate in order to cope with the situation, he adds.
"As a result, the demand for our products in the global market is decreasing…," he said while addressing a post-budget press conference at a city hotel on Monday.
In such a situation, the trade leader says it is necessary to keep the country's largest foreign currency-earning sector's pace smooth.
The source tax hike will make the situation even worse for the industry given the current global context.
Mr Hassan, however, hails the government for some timely budgetary proposals, including a reduction in corporate tax to help create employment.
If the industry survives, revenue could be earned, he says, adding that the sector earned $31.45 billion last fiscal and expects to earn $41 billion this fiscal.
More revenue can be earned without increasing tax rate provided with enhanced export earnings, he observes.
Citing a World Bank report, a BGMEA statement says global trade growth may fall to 4.0 per cent in 2022 which was 10.3 per cent in 2021.
Besides, dollar has taken a strong position and euro is becoming weak. Euro might be equivalent to dollar resulting in a negative impact on the locally-made apparel price in its largest European market.
There is a huge pressure on the balance of payment due to a fall in remittance and high import trend while there is hardly any new employment in the last two years for Covid-19, it says.
"It's necessary to keep the largest foreign currency-earning sector's growth momentum," the statement says, urging the government to reconsider its demand for reducing source tax.
Other BGMEA demands included withdrawal of 10-per cent income tax on cash incentive and zero duty on the import of solar panel.

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