Tariff cuts cannot tame market as businesses make hay

Tariff cuts proved a damp squib in stemming commodity-price rises as revenue authorities feel business cartels make the most of the facility meant for distraught consumers.
Intended impact of the tariff readjustments is in doubt amid price rises of all commodities-be that local or imported-and that prompts the government's revenue board to begin a crosscheck to determine whether the benefits are being passed on to the consumers.
Driven by the doubt, the National Board of Revenue (NBR) has taken the step to check outcome of the slashing of taxes on prices of essential commodities, including edible oils and sugar.
The customs wing of the NBR has started assessing prices of rice, lentils, edible oils, onions, wheat, sugar, eggs, potatoes, beef, fish, apples, oranges, chickens, and poultry-and fish feeds after and before tariff cuts.
They are reviewing data of three consecutive years on the basis of tariff cuts that usually come following demands from different ministries as well as private industries, officials said.
Though industry-insiders have different views on the escalating prices of essential items-they think the market fluctuates on the basis of international prices, energy-price hike, natural calamities and the like.
A senior official at the customs wing says the ministry of commerce (MoC) usually requests the NBR to lower taxes whenever price of any commodity goes up, but impact of the re-fixed tariffs has not been reviewed in detail yet.
"We would request the MoC to give us an analysis of how tariff cuts have impacted the prices at consumer-end on the local market in the previous years," he told the FE writer.
Of late, the NBR cut import taxes on sugar but it left no impact on the market, rather the price went up by Tk 10 per kilogram.
However, industry people say the tariff cut has not been sufficient to reduce the price as it has surged on the international market.
A senior MoC official has said decision-making on tax cut usually takes a quite long time to implement due to "procedural complexities".
"Consumers do not get the full benefit of tax breaks due to such delay as market adopts the high prices by that time," he said.
Under the new move, the NBR would assess import data, including quantity and price, total tax incidence on essential commodities for the period of 20021, 2022 and 2023, until now.
The customs official thinks businesses maximize their profits with the tax cut which the NBR offers for the sake of consumers.
NBR's tax expenditure (TE) is high because of offering widespread tax breaks, which contributes to lower tax-to-GDP ratio, he points out.
On different occasions, the NBR has also cut taxes on onions, edible oils and rice but its impact on consumer prices has not been reviewed yet.

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