Dollar rates go up, government's revenue to increase

The government's revenue earnings have increased from all sorts of commodities as the customs department has raised the rate of the dollar in fixing customs duty on goods imported from abroad.

On the other hand, import costs have gone up, which means increased expenditure for the common people.

The customs authorities regularly adjust the dollar rate with the market. The Sonali Bank rate is followed.

On 23 June the dollar rate was fixed at Tk 117.94 to levy customs duty. Till mid-May this had been Tk 110. Within a span of just 42 days the dollar rare has been hiked by almost Tk 8. As a result, customs duty on various essential items has gone up by Tk 1 to 17 per kg.

A review of documents pertaining to import consignments reveals that in May, the customs duty for soybean oil per kg was Tk 17. One consignment has been released after the rate of the dollar was hiked, where customs duty stood at Tk 19. That means an additional Tk 2 in customs duty is being paid per kg of soybean oil. And extra Tk 1 has to be paid for palm oil.

The Bangladesh Vegetable Oil Refiners and Vanaspati Manufacturers Association has written to the Bangladesh Trade and Tariff Commission (BTTC) regarding the increased import costs. In the letter issued on 23 June, the association pointed to the increased prices of edible oil in the global market, the increase in bank interest rates as well as the increased exchange rate of the dollar.

Leading edible oil refining and marketing company TK Group's director Shafiul Ather, speaking to Prothom Alo, said that even though customs duty on soybean has gone up by Tk 2, import costs have gone up by Tk 5 per kg. The total increase in costs is Tk 7.5. Overhead costs have increased. The letter has been issued accordingly for an adjustment of the costs.

A review of a few consignments of sugar reveals that in April customs duty had been imposed at Tk 40 per kg on sugar imported for USD630 per tonne. The dollar exchange rate at the time had been Tk 110. After the rise in the dollar rate, customs duty on sugar imported for the same price has risen to Tk 42 per kg. In other words, customs duty on sugar has increased by Tk 2 per kg.

Customs duty is fixed at various rates on different goods based on the rate of the dollar. When the dollar rate goes up, even if the previous customs duty rate is imposed, the government's revenue goes up.

The tax incidence on powdered milk now is 37 per cent. In May the tax incidence per kg of this commodity was Tk 136, when the rate of the dollar had been Tk 110. While the price remains the same, due to the new dollar rate, customs duty on new consignments will be Tk 152. That means the customs duty will up by around Tk 16 per kg.

Among imported essentials, there is no customs duty on wheat, lentils and such items. But there is tax incidence on spices and various essential items. The tax incidence on importing spices is 58.60 per cent. In May this year the customs duty per kg of cumin had been Tk 230. Now customs duty on cumin is Tk 247 per kg, a Tk 17 increase.

In March 2022 the dollar rate had been Tk 86. Now it stands at Tk 119.94. In two years three months it has increased by almost Tk 32. Alongside increased dollar rates, import costs are increasing too. Businesspersons say that in order to keep the prices of essentials stable, the government should either provide cuts in duty or fix customs duty with lower dollar rates.

Distinguished fellow of the Centre for Policy Dialogue (CPD) Mustafizur Rahman told Prothom Alo, people are suffering due to the increased cost of essentials. With the dollar rate going up again, customs duty is increasing too. The customs duty on certain essential items should be adjusted. Then the suppliers won't be able to use the dollar rate as an excuse to increase prices. The people will find some relief too.