People's sufferings have increased a lot through paying extra prices for edible oil after the National Board of Revenue (NBR) recently increased VAT.
The NBR's VAT and advance tax collection has increased in parallel to the oil price hike in retail markets.
Edible oil suppliers of the country said a year ago, the cost of importing crude soybean was Tk66.11 per litre. They used to pay Tk12.5 tax to the government. At present, the cost of a litre imported oil is TK78.68, while the tax is Tk15.16.
In other words, the government collects Tk3 additional tax per litre of imported oil as compared to a year ago. It is the consumers who are bearing the brunt of the tax hike.
Due to the oil price hike in the world market, the price of edible oil has increased by about 20% in the last one year.
Internationally, oil prices have been on the rise due to rising imports of soybean oil by several countries, including China, and declining supplies from such nations as Brazil and Argentina. Now, a litre of bottled soybean oil is being sold at Tk115-125 in the country's market.
According to the Trading Corporation of Bangladesh (TCB), prices of open soybean oil have risen by about 21% in a year.
Edible oil suppliers say they have to pay 15% VAT and 4% advance tax on crude oil imports. If the price of oil increases in the world market, and if VAT and tax are collected based on the increased global price, the price in the country's retail markets also increases.
In this situation, the commerce ministry earlier proposed levying VAT on the basis of fixed tariff price on edible oil imports.
The proposal called for fixing the price per tonne of imported oil and levying 15% VAT on that price, instead of imposing VAT on the import price. In this way, even if the price of oil rises in the international market, the amount of tax will remain unchanged. The consumer will not have to bear the burden of additional taxes.
At present, traders have to pay 15% VAT in three phases. Taking this into account, the Bangladesh Trade and Tariff Commission also made a written recommendation to the NBR for a simple VAT rate.
But the NBR paid little heed to these proposals.
Kazi Rezaul Hasan, NBR's second secretary for VAT policy, told The Business Standard, "I don't know if the proposals were reviewed. NBR will take a decision after reviewing the overall issue if the proposals are placed with us."
Golam Rahman, President of the Consumers Association of Bangladesh, said, "Soybean oil is an essential commodity. In order to reduce consumer spending, the government should impose tax at a tolerable level if necessary."
The Bangladesh Vegetable Oil Refiners and Banaspati Manufacturers Association also recommended a simple tax rate in light of the rise in oil prices in the international market. In a proposal sent to the commerce ministry, the association has demanded a tax of Tk15,000 per tonne.
Citigroup director Biswajit Saha told TBS, "If VAT is imposed at one phase on imports, our complexity will be removed. It will also reduce the pressure on consumers."
Bangladesh normally imports eight lakh metric tonnes of crude soybean oil and 12 lakh metric tonnes of refined/unrefined palm oil. The country has an annual demand of about two million tonnes of edible oil.