Yet another hike in duty on sugar underway

The government is considering yet another hike in import duty on both crude and refined sugar to help protect the local public-sector sugar mills from going bust as market prices have hit rock bottom.
Officials said the move came following recommendation from the Ministry of Industries for salvaging the local sugar mills, burdened with unsold stockpiles while new crushing season on the advent.
Bangladesh Sugar and Food Industries Corporation (BSFIC) under the industries ministry proposed that the National Board of Revenue (NBR) either double the existing regulatory duty to 40 per cent or impose 15 per cent VAT at ex-godown stage on the sellable sugar.
At the November 23 cabinet meeting, the Prime Minister instructed the NBR to take necessary steps in line with the proposal of the ministry of industries, the sources said.
They said the NBR has already initiated a move to raise the duty by reviewing the existing situation.
In the proposal, the BSFIC pointed out that sugar is selling at Tk 33,000-34000 per tonne on the local market even after a 20 per cent raise in the regulatory duty last August.
It said market prices of sugar increased slightly by Tk 1000 per tonne. The corporation needs to sell sugar at Tk 37,000 as ex-mill price to avoid losses.
In the proposal, the corporation said it is incurring losses due to piled-up stocks of 137,129 tonnes until September 22, 2015, including last four years' carryover stock of sugar involving Tk 5.07 billion.
The corporation has given two alternative proposals to the NBR to increase import duty on raw sugar.
"Regulatory duty on import of raw sugar can be raised to 40 per cent by keeping Tk 2000 specific duty unchanged. Price of sugar would be Tk 39,465 per tonne and consumer price would be Tk 45 per kilogram," the corporation said.
In its other proposal, the industries ministry recommended imposition of 15 per cent Value Added Tax (VAT) on sugar at ex-godown stage barring sugar produced by the public sector mills.
It also proposed to re-fix the duty on refined sugar to discourage its import as BSFIC and country's refineries are capable of meeting domestic demand.
In August, the NBR fixed a tariff value US$ 320 for per tonne of sugar. With the tariff value, the revenue board also imposed 20 per cent regulatory duty on the essential commodity.
After the imposition of the tariff value, import duty for crude sugar stands at around Tk 7,000 per tonne while refined-sugar at Tk 10,500.
However, after countervailing measure in terms of higher tariff value, international prices of raw sugar saw further down to $272.08 per tonne including freight charge, the corporation mentioned.
With the falling international prices, production cost of transforming raw sugar into refined sugar stands at Tk 34,353 per tonne including duty taxes.
For refined sugar, import cost stands at Tk 42,656 per tonne.
The corporation said in fiscal year 2013-14 and 2014-15 some 1.9 million tonnes of raw sugar was imported in the country against a total annual demand for 1.5 million tonnes.
"There was a decision to set an annual import quota for 13,90,000 tonnes to stop excessive import of sugar but the decision remained unimplemented," it said about the market glut.
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