As the edible oil price continues to soar in the global market, the government's revenue collection from this sector also sees a boost despite the value added tax (VAT) exemption.
However, this upward trend hit the consumers hard as the VAT cuts brought little to none relief to them.
From July to March of the current fiscal year 2021-22, the government collected Tk912 crore more revenue compared to the same period of the previous financial year.
According to the customs department of the National Board of Revenue (NBR), crude soybean and palm oil imports to Bangladesh increased by 2.75% in that nine-month period.
At the same time, the revenue collection of NBR has increased by more than 58% as compared to the same period of the last financial year.
According to NBR data, some 15.96 lakh metric tonnes of crude soybean and palm oils were imported during this period, against which the government collected revenue of about Tk2,500 crore.
During the same period of FY 2020-21, Tk1,566crore revenue was collected against the imports of 15.33 lakh metric tonnes of edible oils.
City Group Director Biswajit Saha told The Business Standard, "When the VAT was reduced in the middle of last month, soybean and palm oil imports cost $1,800 and $1,700 per metric tonne, respectively. Tis month, the prices stand at $1960 and $1800 per metric tonne respectively.
Indicating the possibility of further rise in prices in the international market, he said the domestic market might also feel the impacts due to the crisis over raw material (crude soybean oil).
Edible oil was subjected to 15% VAT at import, production and marketing stages. The NBR first withdrew VAT at the production and marketing stages in March at the request of the commerce ministry.
As those cuts failed to stabilise the oil market, the NBR then reduced the import VAT by 10% after extensive discussion, he added.
Didar Md Dabirul Islam, head of Finance and Accounts at Bangladesh Edible Oil Limited (BEOL), told The Business Standard, "When the government estimated the current fiscal year's revenue from edible oils, the price of crude oil was $800 per metric tonne. At present, the price stands around $1900."
"Thus, the revenue collection as per estimation won't be affected that much for the rest of this fiscal year despite the government's VAT cuts in March," he added.
Dabirul Islam said that if per metric tonne oil is priced at $1800, then VAT per litre comes to about Tk22.50. But, Tk15 of that amount is currently slashed thanks to the exemption.
Although the government has tried to alleviate pressure on consumers by reducing VAT on edible oil in two phases in mid-March, industry insiders believe that rising global prices will not bring much relief to consumers.
Even though the revenue collection was reduced at the beginning due to the cuts, it will continue to increase again.
According to relevant sources, the edible oil producers plan to sit with the government after Eid to discuss the issue.