The knitwear manufacturers and exporters of the country asked the government to reconsider the revised source tax on export products in the proposed budget for the 2022-2023 fiscal year.
In a video message sent to the media, Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) expressed his concern saying that the source tax has been increased from 0.5% to 1% against exports.
“I don't know why the government has increased taxes at this time. There is no logic regarding this rise in such a volatile global situation. So, we are making a polite request to the government to reconsider it,” he added.
Earlier, on Thursday, Finance Minister AHM Mustafa Kamal presented the proposed budget at the national parliament of Tk678,064 crore for the 2022-23 fiscal year.
In the proposed budget, he proposed to increase the source tax on export products to 1% from the existing 0.5%.
In this regard, the BKMEA president said that the price of raw materials, transport and freight costs experienced a sharp hike after the pandemic and the ongoing Russia-Ukraine war has made the situation further volatile.
“Production costs have risen significantly but we are not getting the fair price from the buyers accordingly,” he added.
Moreover, the government has hiked the price of gas recently after hiking the fuel oil prices just a few months ago.
“Our production costs have increased significantly from all aspects and there are not many opportunities to make such profit in accordance with the increased production costs,” he added.
He also said that the industry of the country is struggling to recover from the pandemic. So, the source tax of 1% is not reasonable from any perspective.
“The export industry will not be able to bear this burden in any way. So, again we are urging you to reconsider the proposals. Otherwise, the export sector will face a big crisis,” he added.
The manufacturers also said that the notable aspect of the budget is to continue the development trend of the country by tackling the instability, inflation and various problems at the local and international level due to the pandemic and the current Ukraine-Russia war.
The main theme of the budget is to make the country more economically prosperous with the continuity of development.
In order to do this, it is necessary to pay special attention to the industries that contribute to the economy, especially the ready-made garment (RMG) industry, they also said.
They further said that the turbulent global economic situation has also posed a number of challenges for the RMG industry as the prices of fuel, raw materials and food are rising, while economists fear a recession in several countries, including the EU.
Inflation is sharply rising in Europe and the United States and the countries are raising interest rates to control the situation.
This has created a risk of reducing the demand and purchasing power of the country’s export products in the international market, they added.
Earlier, in response to the national budget, SM Mannan (Kochi), senior vice-president of the BGMEA, said that the proposed budget would increase the source tax on garment exports from 0.5% to 1%, which would be very difficult for the industry in the current global economic situation.