Trade and Tariff Commission proposes withdrawal of VAT on cooking oil production, trading

January 19, 2021 08:59:14

| Updated:

January 19, 2021 09:47:10

Amid the skyrocketing prices of edible oils in the local market, a government body has suggested withdrawing value-added tax (VAT) to tame inflation.

The Bangladesh Trade and Tariff Commission (BTTC) proposed that VAT be withdrawn at cooking oil production and trading levels to lower prices.

To ensure smooth supply chain, the government in February 2015 withdrew VAT at both levels, the BTTC said in a report to commerce ministry recently.

Edible oil prices have shot up in recent weeks.

On Monday, unpacked soya bean oil sold between Tk 112 and Tk 116 per litre and bottled oil between Tk 130 and Tk 140 per litre.

Unpacked oil saw a 40-per cent price hike year on year while bottled oil saw some 30-per cent hike per litre, raising commoners’ woe in the trying time of Covid-19.

Palm oil sold between Tk 97 and Tk 102 per litre, a 62-per cent hike year on year, while palm oil super saw a 57-per cent upsurge in price.

The BTTC report observed that crude soya bean oil now sells at $1,200 per tonne in the international market while palm oil between $1,150 and $1,190 per tonne.

However, the crude oil with increased prices is yet to enter Bangladesh, it said.

Millers are still refining the crude oil they imported one and a half months ago at $920 per tonne.

Once the costly crude soya bean oil enters the market, the commission observed, the price of the edible oil at consumer level may cross Tk 150 per litre.

“Presently, the edible oil price is much higher than the purchasing power of consumers,” the BTTC stated.

The commission suggested fixing the retail price of unpacked soya bean oil at Tk 109 per litre and the bottled one at Tk 124 per litre.

Currently, millers charge Tk 15 for a litre and Tk 50 for five-litre plastic bottles which can be lowered to cut cost at consumer level, it opined.

It sought 15-per cent VAT on 67.67-per cent dutiable price at import stage of crude soya bean, palm oil and palm olein in line with a similar measure taken in 2011 amid an unusual price hike globally.

When contacted, a senior official at commerce ministry said China made “huge” forward purchase of edible oils, creating severe shortages of the consumables globally.

Moreover, he said, production of edible oils in counties fell drastically due to pandemic-related disruptions, causing a hike in prices.

“We’re working on the BTTC report and take steps shortly to lower consumers’ woe,” he told the FE.

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