Muhith hints at tax increase on RMG exports

Finance minister MA Muhith on Friday hinted at increasing tax on readymade garments exports arguing that the industry had became matured with various government supports.His observations came at a discussion meeting on ‘Budget 2015-2016: Selected Analytical Studies’ organised by Bangladesh Instituted of Development Studies at BIDS headquarters in Dhaka.BIDS director general KAS Murshid chaired meeting where BIDS senior research fellows Nazneen Ahmed, Mohammad Yunus and Monzur Hossain and research fellow Abul Basher presented four analytical presentations.Muhith said that garment sector being the highest cash incentive sector was one of the most important economic pillars that had been enjoying the benefits.‘With several government supports, the RMG sector has become matured now and time has come to get some returns from the sector,’ he said.Once the government had reduced taxes on letter of credit opening for the RMG exports; now it could be increased a bit but not as much as it was reduced, the finance minister said.Admitting the government’s failure to ensure sufficient gas supply to the industries Muhith said that the government was now putting emphasis on importing liquid natural gas to come out of the problem.After the start of LNG import, the industries will get new gas connection, he hoped.Pointing out the importance of a ‘big budget’, Muhith said the big budget was an important weapon to become a middle-income country by 2021, although Bangladesh was likely to become such a type of country by 2018 in terms of per capita income.

Regarding the government’s subsidy for different industrial sectors, the finance minister said that subsidy had played an important role and the outcomes were satisfactory, but with the change of time it could be changed.BIDS senior research fellows Nazneen Ahmed said that several industries had been getting subsidies from the government for years, while some of the thrust sectors were deprived of the support.She also suggested formulation of a government policy in this regard so that other sectors could be benefited from the government support like bonded warehouse, duty drawback and cash incentives.Regarding the government’s financing from different sources BIDS research fellow Abul Basher said that the government might obtain credit form international capital market by using its future receivable remittances as collateral.

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