Beverage makers call for a cut in tax
Beverage companies have urged the government to cut supplementary duties on drinks from 25 percent to 15 percent next fiscal year so the sector can contribute more to the economy.
A cut in tax rate will help the sector strengthen its foundation, reduce import reliance and save foreign currency, said Bangladesh Beverage Manufacturers Associa-tion (BBMA).
“This will also result in creating a lot of jobs and revenue generation,” Md Harunur Rashid, president of the association, said in a letter to the National Board of Revenue last month.
Bangladesh has one of the highest tax rates on beverages in South Asia. Supplementary duties and value added taxes together account for 43.75 percent, making beverage products expensive in Bangladesh.
The rate is 35.3 percent in India, 29.2 percent in Sri Lanka, 24.2 percent in Nepal and 30 percent in Bhutan.
The high tax rates are discouraging investment in the sector, the association said.
The association said there is no supplementary duty at local level on ice cream, cakes, chocolates, biscuits, sweets and yoghurt, which seems logical.
At the same time, there should not be any supplementary duty on soft drinks as it is also a food item. At least, there should not be any higher supplementary duty, according to the association.
The beverage sector has expanded in the last 15 years and a large class of consumers has emerged.
The sector's trade accounts for Tk 1,399 crore at production stage and Tk 1,843 crore at marketing stage with tax contribution standing at Tk 625 crore, according to the association.
“The sector should be given more time to mature. But the tax has already become a burden,” said Rashid.
He said local and multinational companies operating in the country have invested Tk 3,237 crore in the last five years.
“They plan to make more investment. But they are not making the investment as their existing capacity has already remained unutilised,” said Rashid. More than 270,000 people are directly involved with the sector.
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