Commerce Minister Tofail Ahmed today warned of new challenges for the country’s garments sector emerging due to global politics, and suggested the government not to increase tax at source on export at this moment.
The minister said this while taking part in a discussion on the proposed budget for FY 2016-17 in the parliament.
The current tax at source on export is 0.6 percent while the finance minister proposed it to be 1.5 percent in the budget for FY 2016-17.
Stressing upon the challenges ahead for the country’s garments sector, Tofail urged Prime Minister Sheikh Hasina and Finance Minister AMA Muhith not to increase the tax at source on export as proposed in the budget and keep it at the present rate.
“It is not the right time to increase tax at source on export as exporters will face a fresh challenge following the fast-changing scenario in Europe,” Tofail said.
"Our exporters will face a challenge as pound sterling and Euro are getting weak against dollars following Brexit," he also said, adding that the exporters will face “double blow” due to this.
As the majority people of the United Kingdom voted to leave the European Union (EU), Bangladesh will have to re-negotiate trade issues with the UK, the minister added.
Justifying his stance on keeping source tax at a lower level, Tofail said India is trying to take the second position in the global apparel market as it has announced a Rs 6,000-crore incentive package for its RMG sector.
Bangladesh has been enjoying duty-and quota-free benefit in the EU market under the Everything but Arms (EBA) arrangement, and the UK is a big market for Bangladesh.