No price 'adjustment' to dollar, specific taxing proposed

Commerce ministry seeks fixed-rated duties on edible oils and sugar to keep market supply sufficient and prices stable while the state minister in charge pledges no 'price adjustment' during Eid.
Sources said the ministry recently made the proposals to the National Board of Revenue (NBR) for inclusion in the upcoming national budget, suggesting Tk 25,000 and Tk 20,000 to be levied as specific customs duty (CD) on import of per- tonne refined and raw sugar respectively while Tk 10,000 as specific value-added tax (VAT) instead of existing VAT on import of per-tonne crude soybean, palm and sunflower/canola oils separately.
There is now no duty on sunflower/canola oil imports.
Currently, sugar import is subject 30-percent regularity duty (RD). And 15-percent VAT and Tk 3,000 as CD are applicable to import of per-tonne raw sugar.
The government levies 2.0-percent and 5.0-percent advance income tax (AIT) and advance tax (AT) at import level on unrefined sugar.
The commerce ministry has proposed withdrawal of all duties on import of raw and refined sugar while suggesting the specific CD in the next national budget.
Traders have to pay 30-percent RD on import of refined sugar while CD is Tk 6,000 on import of per-tonne sugar. They also have to pay 5.0-percent and 5.0-percent AIT and AT on import of a tonne of refined sugar.
However, there is no VAT at the production stage of raw sugar.
There is a 20-percent total tax incidence (TTI) including 15-percent VAT at the production stage of soybean oil and palm oil each and 5.0-percent AT on import of per-tonne crude soybean oil and palm oil each.
Currently, there is no duty on import of crude sunflower/Canola oil.
The commerce ministry sent the proposal for withdrawal of the import duties on import-dependent items as their current prices on the local market are exorbitant, much to consumers' annoyance and woes.
The ministry mentions that prices of edible oils and sugar fluctuate on the international market. "A negative impact is created by the sugar and edible-oil prices in the market due to the existing AD VALOREM duty."
It believes prices of edible oils and sugar will not be reduced or increased if specific duty is imposed instead of ad valorem duty.
The ministry claims that the government revenue earnings will increase over existing structure if the NBR imposes specific duty.
Some refiners declined to make comment regarding the proposed fiscal measure.
The government is trying relentlessly to keep the prices and supply of essentials affordable. But the prices of such items often increase. The items were in high demand due to two- or threefold rise in their demand in the past fasting month of Ramadan.
According to the commerce ministry, Bangladesh's annual demand for edible oils is over 2.2-2.4 million tonnes, with over 95 per cent coming through import.
Seven top refiners in the country account for 90 per cent of the oil imports, and analysts say they have a control on the market.
The annual demand for sugar in Bangladesh is around 2.2/2.3 million tonnes. Some 2.2-2.4 million tonnes of raw sugar is imported annually.
More or less 50,000 tonnes of refined sugar is imported annually, according to the trade commission.
Meanwhile, a word of assurance came from state minister for commerce Ahsanul Islam Titu that the prices of edible oils would not be "adjusted" before the forthcoming Eid al-Adha fiesta despite the US dollar exchange-rate hike from Tk 110 to Tk 117.
Talking to reporters at his secretariat office Tuesday, he said edible oil is an import-dependent product. "For sake of consumers, the price of edible oils will not be adjusted before the eid of sacrifice although the dollar prices increased. Even if it appreciates, manufacturers and importers will not fix any new price till next Eid. They would supply edible oils at the previous prices."
Mr Titu assured that even if the price of the dollar increased by another seven taka, there would be no impact at the consumer level.
The Minister of State for Commerce explained, "The importers were complaining that they were not getting expected dollars from the bank at the official rate. At that time, some traders were settling LC at Tk 120, some at Tk 122. Some were settling at a different rate. Now they can import at the government rate."
Replying to a question, he said, "We were active in keeping the market stable before and after last Ramadan...When Eid comes, there are some people in our country who look for opportunities, increase the prices of goods one-or twofold even through creating artificial crisis of essential goods."
Ahsanul Islam said, "The Prime Minister has asked me to monitor again the same way as we monitored during the last fasting Eid. The Prime Minister gave instructions so that consumers do not face any difficulties and get commodity goods at a fair price during the upcoming Eidul Adha."

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