Edible oil prices: Hike on despite the tax cuts

The prices of edible oil have gone up at the wholesale level yesterday despite the 30 percent tax exemption at the import and production stages.

Amid public outcry over the spiral in the prices of edible oil, the government on March 14 waived 15 percent value-added tax at the production stage and 5 percent at the retail level. Two days later, another 10 percent VAT was cut at the import stage.

And yet, the wholesale prices of soybean and palm oils increased by Tk 200-Tk 280 per maund in a day to Tk 6,200 and Tk 5,250 respectively at Khatunganj in Chattogram.

Retailers at several kitchen markets in Dhaka were seen selling a litre of bottled soybean oil for Tk 168 while the five-litre bottle was selling at Tk 795. Loose soybean oil was not available at most of the shops in the capital yesterday.

However, data from the Trading Corporation of Bangladesh (TCB) showed that the price of bottled soybean oil has remained unchanged in Dhaka since March 14.

Md Hasan Ali, a retailer at Shukrabad Bazar, said they did not hear anything about the price reduction from wholesalers yet. He, however, said both the sales and supply have come down a lot recently.

About 4.5 lakh tonnes of crude soybean oil and 6.3 lakh tonnes of palm oil were imported in the first eight months of the fiscal year, according to the National Board of Revenue. Among them, about 4.2 lakh tonnes of edible oil were imported ahead of Ramadan.

The edible oil prices came down after the government cut duty but the prices increased as the millers choked the supply, said Rafiqul Islam, a wholesaler.

The millers have reduced the sale of SO (Supply Order) as they are forced to write the price of the product on SO slip in compliance with the directive given by the commerce ministry recently.

As a result, the price has increased by Tk 5 per kg in the last one day, Islam added.

Meanwhile, consumers have been paying Tk 26-Tk 30 VAT per litre on bottled soybean oil at the government-fixed price of Tk 168 per litre, according to refiners.

It is strange that the government has reduced VAT to give some relief to consumers but did not adjust the price it had fixed earlier, said Kazi Rafiq, a consumer at Karwan Bazar.

"It will take some time to get the benefit of tax exemption," said Ghulam Rahman, president of the Consumers Association of Bangladesh.

The government should revise the edible oil price in line with the tax exemption, he added.