Abu Sazzad :
Garment manufacturers are worried over the proposed hike in tax at source for export-oriented industries in the budget proposal for financial year (FY) 2015-2016, insider said.
Recently, Finance minister MA Muhith hinted at increasing tax on readymade garments exports arguing that the industry had became matured with various government supports.
The finance minister said, garment sector being the highest cash incentive sector was one of the most important economic pillars that had been enjoying the benefits. ‘With several government supports, the RMG sector has become matured now and time has come to get some returns from the sector,’ said the minister.
Once the government had reduced taxes on letter of credit opening for the RMG exports, now it could be increased a bit but not as much as it was reduced, the finance minister said.
Talking to the former Bangladesh Garment Manufacturers and Exporters (BGMEA) President Abdus Salam Murshedy said, the proposal has come at a time when the country’s highest foreign currency earning sector has been facing a tough time in recent years including labour related issues, fire safety net issues and relocation of factories. Moreover, a number of orders cancelled due to the political unrest of the country, he also added.
“If the source tax on exporting manufacturing products increased, it will have a negative impact on the sector”, said the former BGMEA president.
Actually, Manufacturing sectors are facing a big trouble for operating their business due to higher production cost. The BGMEA leader urged the government to introduce zero duty instead of the existing 1.0 per cent for importing capital machinery in an effort to boost industries.
Currently, exporters are providing .30 per cent source tax on exporting manufacturing products, he said. The current source tax on export is reasonable but if it increased in the upcoming budget, it would be burden to the exporters, also said the BGMEA leader.
He urged the government for not increasing the source tax on export, rather it should keep the existing position for the betterment of the sector, pointed the BGMEA leader.
Already, competitiveness of the export products has increased in the international market, he observed. On the other hand, the garments owners are now trying to maintain the proper building code and fire safety related issues, as per the recommendation of Accord and Alliance. For this, a huge number of amounts are spending to make the factory green, explained the BGMEA leader.
The leader also requested the government to pay serious attention to the matter and reconsider the proposal to help the sector that maintains continuous growth amid the economic meltdown in the EU (European Union) and political unrest of the country.
The move for increasing source tax also contradicts the government projection of achieving 7.2 per cent GDP (gross domestic product) growth in the proposed budget,” he claimed.
Talking to the reporter, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Selim Osman said, the tax hike would hamper growth of the ready-made garment (RMG) sector, which has long been struggling due to the Eurozone crisis and other problems.
“The hike of the source tax is not finalized, it is just a pre-budget proposal, we will talk to the government regarding this matter, so that, it would not increased for the betterment of the exporters” said the BKMEA leader.
