The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) recently wrote a letter to Prime Minister Sheikh Hasina to withdraw all kinds of taxes and duties on the fuel oil at both import and supply levels to address the ongoing crisis – price hikes of essential commodities.
In a letter issued on 14 August, a copy of which The Business Standard obtained, FBCCI President Md Jashim Uddin also requested the government to further adjust the fuel oil price with the tax lifts, at least for a temporary period.
Meanwhile, the Energy Division and other government bodies are also in talks about decreasing taxes on fuel oil to reduce its price.
Talking to The Business Standard, Energy Division officials said as soon as a proposal for VAT-tax rationalisation is received from the BPC and Petrobangla, it will be sent to the prime minister for approval.
If the prime minister approves the proposal, the Energy Division will then request the finance ministry to reduce the VAT-tax rates accordingly, they added.
At present, around 34% tax is levied on the imports of liquid fuel. Apart from this, an additional 15% VAT is imposed at the distribution level and another 2.5% VAT is levied at the business level.
On top of this, an additional Tk5.2 is added to the price of each litre of fuel in the form of various charges in the existing pricing method.
Under this tax regime, the government earns around Tk10,000 crore and even more in revenue from the liquid fuel sector every year.
In 2019-20 and 2020-21, the BPC's payments to the national exchequer amounted to Tk14,123 crore and Tk15,046 crore, respectively, according to the corporation's budget report.
The FBCCI, in its letter to the prime minister, said that the recent fuel price hike will create more pressure on the economy and increase public suffering.
"If the existing 34% tax incidence on fuel is withdrawn, the feared adverse effects on the economy can be avoided."
The letter also said the ongoing organised load shedding hampering industrial production.
"Due to the increase in the price of fuel oil, the prices of all products have gone up," Mostofa Azad Chowdhury Babu, senior vice-president of the FBCCI, told The Business Standard.
"Even farmers, who badly need irrigation for Aman paddy, are unable to do so due to the high price of diesel. As a result, paddy production is also disrupted. Hence, we may face a shortage of rice. Taking this matter into consideration, we have requested to withdraw all types of taxes and duties on fuel oil to reduce fuel price," he added.
FBCCI sources said copies of the letter were also sent to the Ministry of Commerce, the Ministry of Power, Energy and Mineral Resources, and the National Board of Revenue.
Meanwhile, in a recent press conference, NBR Chairman Abu Hena Md Rahmatul Meneem concluded that reducing the taxes on fuel is a government policy decision.