Apparel makers seek cuts in source tax

Garment and textile makers yesterday urged the government to reduce the tax at source to 0.3 percent from the proposed 1.5 percent for fiscal 2016-17 as the cost of production is increasing every year.

The source tax should remain at the existing 0.6 percent for the sake of the growth of the export-oriented industries, said Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), at a press meet at the BGMEA office in Dhaka.

BGMEA, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), Bangladesh Textile Mills Association (BTMA), and some other platforms related to the sector jointly organised the press conference to voice their concern over the proposed 1.5 percent source tax.

The government plans to reduce corporate tax for the garment sector to 20 percent from the existing 35 percent. But Rahman demanded the tax be set at 10 percent.

He also urged the government to keep all the materials, purchased from the local market, beyond the purview of value-added tax to make export more competitive.

Apparel exporters also called upon the government to allow duty-free import of all kinds of fire fighting equipment to improve workplace safety.

For the sake of market diversification and higher export growth, the apparel manufacturers sought 2 percent incentive on the value of freight on board of garment items bound for European markets and 5 percent incentive for new destinations.

Aslam Sunny, vice president of BKMEA, said the rise in duty -- from 3 percent to 5 percent -- on import of chemicals used in effluent treatment plants will discourage new investments in the apparel sector.

Fazlul Hoque, vice president of BTMA, said the government doubled the gas price for captive power plants in September last year and now plans to raise the price again. The textile sector will suffer a lot if the gas price is hiked again, Hoque said.