Dhaka, June 3: Leaders of the BGMEA on Friday urged the government not to raise the tax at source in the apparel sector and they termed the proposed 1.50 percent tax an ‘anti-industry’ measure.
They want 0.30 percent tax at source arguing that the sector is already ‘plagued by crises’.
The tax imposed on exports at source was 0.30 percent in 2014-2015 fiscal year while it was made 0.60 percent in the outgoing fiscal year.
Finance Minister AMA Muhith on Thursday proposed 1.50 percent tax at source on exports for the coming fiscal year.
Siddiqur Rahman, President of the export-focused readymade garment industry lobby, says they will sit with the commerce minister, finance minister and the prime minister over this issue.
“The proposed 1.50 percent tax at source is a conflicting measure when it comes the industry’s further development,” President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Md Siddiqur Rahman told a post-budget press conference at BGMEA Bhaban in the city.
Some steps have been proposed in the budget to boost the industry, but there are also some that go against the industry’s interest, he said, adding, “It means the direct tax will be hiked by 150 percent. This goes completely against the industry’s development.”
The BGMEA president, however, greeted the Finance Minister for taking a big challenge of introducing such a big budget.
“But we think its implementation will be big a challenge for the government. We’ve both potentials and tough reality,” he added.
Rahman also mentioned that there are some measures in the proposed budget that will encourage industry that include Tk 4500 crore incentives in the export sector.
He, however, said it will be conflicting with the targeted 7.2 percent GDP growth in the coming fiscal year if 1.50 percent tax is deducted at source on exports.
For the current FY 2015-16, the finance minister had proposed to take the tax up to 1 percent, but later lowered it to 0.6 percent in the face of protests from the businesses.
“Under the circumstances, hiking the tax at source will push the apparel sector into a deeper crisis. A total of 618 factories have been closed down due to various reasons while 319 more are following suit.
“If taxes increase, no factory will be able to survive,” Rahman said.
He, however, welcomed the proposal to bring the corporate tax rate for the garment sector to 20 percent from 35 percent in the forthcoming fiscal.
BGMEA Senior Vice President Faruque Hassan, Vice President SM Mannan (Kochi) and Vice President (Finance) Mohammed Nasir were, among others, present.