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Sunday, June 22, 2008
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Tariff Structure Change

Duty slash to make 3,540 items cheaper

Change in tariff structure in the proposed budget for fiscal 2008-2009 will cut down duty on 3,540 imported commodities but raise it on 45 items, according to an analysis by the National Board of Revenue (NBR).

The duty slash on items mostly industrial raw materials, intermediate goods, capital machinery and consumer goods will bring down cost of local production and make export trade more competitive, NBR officials noted.

But prices of refined sugar, finished diamond, gold, mandarin, grapefruit, lemon, table and kitchenware, silk fabrics and finished marble tiles will go up due to the raise of import duty.

The government has replaced the existing three-tier slab with four-tier one to simplify the tariff structure and provide support to importers of raw materials and intermediate goods.

In this case, the highest slab on finished products -- 25 percent -- has been kept unchanged. The existing 5, 10 and 15 percent customs duty will be reduced to 3, 7 and 12 percent respectively.

As a result, import duty on 1,723 items will come down to 12 percent, that on 1,281 items to 7 percent and 506 items to 3 percent, said NBR sources.

Import duty on 30 other items will also be cut by issuing a separate SRO (statutory regulatory order), according to the sources.

Meanwhile, customs duty has been increased on 19 items including diamond, both rough and polished, liquid paraffin, paints and varnishes, carbon steel strips, LP gas cylinder, electrical apparatus and children's drawing books.

Supplementary duty on 20 items has been increased. The items include mandarin, grapefruit, lemon, malt/milk food preparation, tableware, kitchenware, silk fabrics, finished marble tiles, diamond and chair.

Specific duty has been increased on three items. The duty on refined sugar has been raised to Tk 6,000 per tonne from Tk 5,000 while duty on 11.69 grams of gold has been increased to Tk 150 from Tk 125.

As VAT exemption has been withdrawn from children's drawing and picture books, raw silk and dupion silk yarn, prices of these items will also increase.

Due to change in the duty structure slab, the country will face a Tk 2,000 crore loss of duty.

Meantime, with the proposed imposition of one percent duty on import of capital machinery under indemnity bond, the country will have additional revenue earning of Tk 350 crore.

Another Tk 150 crore in revenue will be earned through other duty measures on imported commodities.

Revenue earning will reduce by around Tk 1,500 crore for the slash in import duty due to the changes.

The overall NBR revenue will see a 19 percent growth with an increase of import duty by 17 percent.

On the growth, NBR sources said import of industrial raw materials, capital machinery and intermediate goods will increase a lot due to the duty cut, and this will result in a rise of revenue.

“Rise of prices of different commodities including petroleum products in the international market will also bring us more revenue, contributing to achievement of the growth target,” said an NBR source.

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