Finance minister AMA Muhith holds a meeting with leaders of chamber bodies, led by FBCCI president AK Azad at the minister’s secretariat office in Dhaka on Thursday. — New Age photo

Businessmen on Thursday urged the government to review the proposed 1.2 per cent income tax at source on export receipts in the new fiscal year amid falling demand of the readymade garments in the Western countries.
They made the request when leaders of the Federation of Bangladesh Chambers of Commerce and Industry led buy its president AK Azad met finance minister AMA Muhith at his secretariat office.   
Leaders of the Bangladesh Knitwear Manufacturers and Exporters Association, Bangladesh Garment Manufacturers and Exporters Association and Bangladesh Textiles Mills Association were also present at the meeting.  
They suggested that the government should retain the existing rate of 0.60 per ent to 0.70 per cent tax considering the crisis in the Eurozone which has already slowed down the country’s RMG-led exports.
The finance minister did not give any assurance to the leaders of the RMG sector, rocked by week-long violent protests by garment workers at Ashulia demanding for higher pay.
He agreed that the garment sector was the strength of the country’s economy, but he told them that nothing would be finalized before June 27 when the proposed budgetary measures would be passed in parliament.
The new tax rate on the export receipts is one of the major measures proposed for the coming fiscal year.
The National Board of Revenue chairman, Nasirddin Ahmed, told a post budget press conference that the export-oriented sector contributed at least 10 per cent of the revenue earnings.
Besides, fluctuation of local currency benefited the RMG sector by Tk 70 billion in the outgoing fiscal year, he pointed out.
World Bank economist Sanjay Kathuria said time is not appropriate for raising the tax rate.    
BGMEA president M Shafiul Islam Mohiuddin said they had to compromise with buyers on prices due to waning demand. Besides, the hike of power and energy tariff coupled with high bank interest rates have pushed up the production cost by 12 per cent, he claimed.
He refused to admit that fluctuation of local currency against the US dollar benefited the RMG industry.
Echoing the demand of the BGMEA president, BKMEA president AKM Selim Osman urged the finance minister to continue the existing rate of income tax at source.
The business leaders made others demands like imposing zero tariff on import of capital machinery for the 100 per cent export-oriented industries.
The finance minister agreed to withdraw new VAT at production stage of essential aluminum crockery items and VAT on its aluminum ingot and scrap.
He said the duty structure on vehicles would remain the same in the next fiscal, but efforts would continue to rationalise the duties.
NBR chairman Nasiruddin Ahmed, FBCCI first vice-president M Jasim Uddin, vice-president Mostafa Azad Chowdhury Babu, BTMA president Jahangir Alamin, Bangladesh Dokan Malik Samity president Amir Hossain and other leaders of FBCCI were present at the meeting.