Government to backtrack from specific duty on fuel imports

The government is likely to backtrack on its decision to impose 15 per cent VAT on ballpoint pens, and set a specific duty on fuel oil imports in the proposed budget for FY 2023-24, after facing widespread criticism from the experts, parents and stakeholders.

Instead, the government is going to impose a 5 per cent VAT on ballpoint pens and fix customs duty, advance tax and VAT as earlier on fuel oil imports.

Besides, the government is likely to withdraw the provision of mandatory submission of invoice regarding fuel oil imports, in a bid to tame inflation and rein in oil price at the consumers’ end, said finance ministry officials involved with the budget preparation.

Earlier, fuel oil importers had to submit invoice. If imported at a higher cost than minimum tariff value, they had to pay duty as per the price mentioned in invoice. In this case, fuel oil importers will not have to pay additional duty and VAT.

Insiders say that consumers are not getting fuel at low price due to the decision. The government has to withdraw all sorts of duties and taxes so that production cost can be reduced due to low fuel cost. It will help reduce government’s subsidy as well.

Educationists opined that there is no way to impose VAT on ballpoint pens as the decision would hinder the education for poor and medium earning families. They recommended withdrawing VAT and taxes on educational essentials.

In the proposed budget for FY24, the government imposed a 15 per cent VAT on ballpoint pen at the manufacturing stage and levied specific duty of Tk 13.75 per litre on 11 types of petroleum products, including kerosene, light diesel, motor spirit and jet fuel, withdrawing VAT, AT and customs duty.

The government also imposed a specific duty of Tk 1,117 per barrel (Tk 7.02 per litre) on import of petroleum oil, bituminous minerals, and crude oil; and Tk 9,108 per tonne (Tk 9.10 per litre) on furnace oil imports.

Earlier, the prices of major fuel oils such as furnace oil, jet fuel diesel, and octane included a total of 34 per cent import duties and taxes, with a 10 per cent customs duty, 15 per cent VAT, 2 per cent advance income tax, and 5 per cent advance tax.

Meanwhile, 28 per cent import duties and taxes were imposed on crude oil, and 31 per cent on base oil. The duties and taxes are likely to be imposed again.

However, the National Board of Revenue (NBR) collected import revenue by charging a duty of $265 per tonne of furnace oil regardless of the import price and jet fuel, diesel and octane face a fixed minimum assessment rate of $0.40 per litre.

Besides, the customs authorities also assessed the invoice of fuel imports and if the price of fuel is higher than $0.40 per litre, importers had to pay a higher duty as per the price.

According to the Custom House, Chattogram, the latest assessment rate was $270 per tonne of furnace oil, $0.49 of high speed diesel oil, $0.50 of kerosene oil, and $0.55 of motor sprit oil imports.

If the government withdraws the invoice submitting provision when the budget will be passed in the parliament, importers can clear duty only at $265 per tonne of furnace oil and $0.40 per litre of jet fuel, diesel and octane.

Currently, diesel and kerosene are selling for Tk 109 a litre at the consumer level, while octane and petrol are selling for Tk 130 and Tk 125 respectively.

Earlier, the Federation of Bangladesh Chambers of Commerce and Industry demanded the government to lower the prices of fuel oils by withdrawing import taxes to protect the economy from the adverse impact of the price hike of fuel oils.

The apex trade body of the country sent a letter to Prime Minister Sheikh Hasina in this regard seeking her instructions to withdraw import taxes on fuel oils and to readjust the prices.

Meanwhile, former advisor to the caretaker government and educationist Rasheda K Chowdhury said, “The government should withdraw VAT and taxes on educational goods like pen, book and ledger etc. as there are a large number of people who are suffering to ensure education for their children due to soaring inflation triggered by economic headwinds.”

“Already, a huge of number students has left the schools during the Covid-19 pandemic. If the government takes such decision, it will pave the way to additional dropouts,” she said.