Apparel industry wants tariffs removed on man-made fibre

Textile and garments owners have called for removing all tariffs on man-made fibre for the growth of the non-cotton garments industry in the country.

Leaders of the Bangladesh Textile Mills Association (BTMA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) made the proposal during a pre-budget discussion with the National Board of Revenue (NBR) at the Revenue Building in the capital's Segunbagicha on Wednesday.

Over 70% of the current global apparel market is of synthetic or man-made fibre, while it accounts for only 30% of Bangladesh's exported garments, BTMA officials said on the occasion.

Entrepreneurs have long been blaming excessive tariffs on imported man-made fibre for its poor market growth in the country.

According to textile industry leaders, man-made fibre requires less water and chemicals compared to cotton. But local entrepreneurs are reluctant to invest in it because of the high tariffs on non-cotton imports. If the material gets the same duty-free facility as cotton, it will be possible to increase the market for it.

Currently, there is no duty on cotton imports, while import duty on man-made fibre is 10% or above, they said, adding that in some cases VAT and in some cases advance tax has to be paid as well for synthetic fibres.

Meanwhile, responding to a call to reduce additional import duty on machinery spare parts, NBR member Masud Sadiq asked them to make a list of necessary spare parts for approval.

BKMEA officials, in the meantime, proposed maintaining the existing 15% corporate tax in the textile sector while withdrawing the 2% advance tax on cotton purchases from the local market.

They further proposed maintaining the existing 0.5% tax at source and corporate tax on garment exports for the next five years, withdrawing tax on cash incentives, reducing tax on import of various machinery used in factories to 1% like capital equipment, repealing the provision of submitting VAT returns for exporter factories.

Presiding over the meeting, NBR Chairman Abu Hena Md Rahmatul Mumeen said, "The garment sector is doing well. There is no reason to be stingy in supporting them. The support will continue. But at the same time, the revenue discipline is also needed."

Put more pressure on the wealthy: BEA

In a separate meeting with the NBR, the Bangladesh Economic Association (BEA) has recommended putting more pressure on the wealthy and ending the culture of increasing tax pressure on the poor.

A delegation of the executive committee of the BEA, headed by its four-time president Abul Barakat on Wednesday handed over a written proposal in this regard to the NBR on Wednesday.

In the proposal, the association asked the government to emphasise four-dimensional analysis in formulating the next budget.

Due to the economic recession amid the Covid-19, all countries around the world are now facing a difficult situation, the association said. 

They added that in these circumstances, inequality and multidimensional poverty will not be eliminated despite an increase in GDP and per capita income if policy implementation remains limited to the interest of the free market and corporate imperialists.

The association said the pandemic has made the poor poorer. The labour market has shrunk drastically. Additionally, the rising price of commodities is putting more burden on common people. In all, Bangladesh has now become a country of high and dangerous income inequality according to Gini coefficient and Palma ratio.

In order to improve the living conditions of low-wage earners affected by the pandemic-induced lockdown, the economy needs to be recovered to the pre-pandemic level by reducing inequality in income, wealth, health and education, said the association.

It suggested making the budget for the coming 2022-23 fiscal year to be formulated in an expansive and comprehensive manner to this end. The budget should not be compressive.

The burden of indirect taxes does not reduce poverty and inequality but increases them, the association said, adding that this is why it is necessary to ensure more direct tax than indirect tax.

The BEA proposal recommended collecting tax from areas that are usually ignored, such as wealth tax, tax on excess profits, recovery of black money, recovery of smuggled money, etc.

It also called for taking up policies to protect the interest of domestic industrialisation and agriculture by easing the tax burden on strategically important sectors and sub-sectors.