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TIB: Decision to slash 10% VAT on imported coal imprudent

  • Published at 09:13 pm December 7th, 2019
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The logo of Transparency International Bangladesh (TIB) Collected

Although it is said that the cut will reduce the cost of power generation, the rights group called upon the government to ensure that its benefits will eventually reach the general people

The decision of the National Board of Revenue (NBR) to slash 10% value-added tax (VAT) from the existing 15% on coal imported for power generation is imprudent, Transparency International Bangladesh (TIB) has said.

Although it is said that the cut will reduce the cost of power generation, the rights group called upon the government to ensure that its benefits will eventually reach the general people.

In a statement issued yesterday, TIB Executive Director Dr Iftekharuzzaman expressed its concern over the way the government is continuously risking the environment by setting up coal-fired power plants. 

On Wednesday, NBR reduced VAT on the import of coal for power plants to 5% from existing 15% for five years until June 2025 to allow electricity generation at lower costs.

Iftekharuzzaman said: "This latest decision of VAT exemption is a continuation of suicidal dependency on the argument that electricity is being made available from coal plants at the most affordable price. It’s against the government's national commitment to the goal of sustainable development as well as the Paris Agreement.

"We know that the government is committed to produce renewable electricity by 10% of the total production by 2021, while at present it is less than 4%. At the same time, the government pledged that a renewable approach would be followed to produce 50% of the electricity by 2050. But it does not seem to have any strategic and effective initiatives.”

Expressing doubts over the logic that the decision of VAT exemption for reducing the additional cost on consumers, Dr Zaman said: "The question is how many customers will get the benefits as the government earlier gave similar tax deductions to the furnace oil-based plants, but the entrepreneurs of these plants pocketed the benefits.

"Moreover, when the government is straggling to raise revenue, it is not understandable how such a large discount would be acceptable.”

The TIB executive director furthered: "Taxation on coal imports is a backward and suicidal step, in such a situation the world is setting carbon taxes to recover from environmentally-destructive fuel. This will benefit the domestic and international corporations, who are interested in turning Bangladesh into a coal-dumping centre."

On the other hand, the use of renewable fuel will be discouraged, he said, urging the government to withdraw such a suicidal decision.