BGMEA President Atiqul Islam yesterday urged the government to keep tax at source at 0.30%, terming the proposed budget for the fiscal year 2015-16 unfriendly for the textile industry.
In the proposed budget unveiled on Thursday, the government proposed to raise the tax at source for the RMG sector and other export oriented exporters to 1% for the fiscal year 2015-16.
Currently, the apparel makers pay 0.30% tax at source, while the other export-oriented sectors pay 0.60%.
The BGMEA chief made the appeal at a media briefing at his office jointly organised by Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA).
“In the proposed budget, the country’s export-oriented RMG sector is the worst loser. The government has proposed 1% tax at source from 0.30%, which is 233% higher and it would hamper the growth of the sector as it will push production costs up,” Atiqul told reporters.
Saying the proposed budget was business-friendly but not textile-friendly, he added that the unexpected hike in the tax at source would hamper the potential and the export growth of the clothing sector.
The continuation of the existing tax ceiling was needed to overcome hurdles such as factory disaster, political unrest, devaluation of euro against US dollar, and compliance issues, Atiqul added.
The hike in source tax and imposing 1% import duty on capital machinery were in conflict with the government’s goal of achieving 7% growth target for FY2015-16, he said.
For the outgoing financial year, Bangladesh had set a 10% export growth target; but in the first 10 months it has achieved less 3%. During the same time, our competitors Pakistan, India and Vietnam have posted 8.75%, 10.58% and 13.28% growth respectively, Atiqul pointed out.
Speaking at the briefing, BTMA President Tapan Chowdhury said Bangladesh’s export growth was less than 3%, while others were doing better and had a fully integrated sector. He added that the government should not introduce any measures that would cause Bangladesh to lag behind.
“The new level tax at source is a suicidal decision for the RMG industry and it would be very tough to survive,” said Rafez Alam Choudhury, president of Bangladesh Garments Accessories and Packaging Manufacturers and Exporters Association (BGAPMEA).
The apparel industry leaders, however, thanked the government for its proposal to withdraw VAT on safety equipment, plans to diversify market and products, plans for establishing economic zone and allocating Tk100 crore for skill development.
