Speakers at a discussion underscored the need for rationalising tariff rates for protecting consumers' interest, given the "very high" import duty.
In 2017, the average tariff stood at 25.64 in Bangladesh while it was 12.19 per cent in South Asia, and the consumers ultimately pay the taxes, they said.
The views came at the roundtable discussion meeting, organised by the local think-tank Policy Research Institute of Bangladesh (PRI) held on Tuesday in Dhaka.
Former adviser to the caretaker government Dr A B Mirza Azizul Islam chaired the discussion titled "Protection policy, export diversification, and the forgotten consumers".
PRI chairman Dr Zaidi Sattar while presenting the keynote paper said that on an average, the price of products goes up by 75 per cent due to tariffs imposed.
"During the 5-year period, from FY 2013- 2017, the total protection cost to consumers works out to a substantial amount of US$70.6 billion," he said.
He also said in FY'2017, consumers paid over international prices of imports and import substitutes, about $14.2 billion, or roughly 5.7 per cent of FY'17 gross domestic production.
"This amount is a resource transfer from the pocket of consumers into the pocket of producers," Dr Sattar noted.
Speaking as the chief guest, Prime Minister's Economic Adviser Dr Mashiur Rahman acknowledged that due to 'faulty' tax system, consumers are forced to pay much higher than they should.
He said once step was taken for tax reform, but later it was found that income tax reform has not been carried out at all and the value added tax (VAT) and supplementary duty (SD) were not made trade-neutral.
Regarding variation of regulatory duty, VAT, and SD, the adviser said all these are for the protection of producers. "But the import protection is not really helping the country at all."
"We are deviated from the rational of tax reforms entirely. As a result, rational scheme of taxation can't be identified, rather found arbitrary. We deviated more and more from the principle," he said.
He said that the tax scheme needs to be rationalised through review.
The adviser said due to misallocation of incentives as well as high customs duty, no viable strong industry could be grown up.
"Many industries got support on different occasions. If the incentives are reviewed and given rational support, we will not continue to support inherently weak industries. Thus, industries which have a bright future can be identified," he added.
Noting high duty leads to low import, he said that consumers are those who pay all these duties, profit, and cash incentives.
"Imposing the higher rate, we do not necessarily collect higher taxes. By allowing the economy to grow, we actually get more taxes," he said.
HE continued, "That basic principle of taxes has to be there. Unless the tax policy makers recognise the basic principle, it is very unlikely that we can help the consumers … we will penalise the whole economy," he noted.
President of the Consumers Association of Bangladesh (CAB) Ghulam Rahman said that none talks about the interest of consumers, even the government also avoids it.
"During the preparation of a fiscal budget, everyone wants business-friendly budget, industry-friendly budget, but none says the budget should be consumer-friendly," he said.
Golam Rahman said that there are many laws for the protection of consumers' interest but their implementing authorities lack capacity.
PRI Executive Director Ahsan H Mansur underscored the need for changing the protection policy through changing the mindset.
He said Bangladesh has a fixed amount of investable resources. "But my question is how efficiently are we allocating those resources? Is it in that inefficient industries or should it go to the efficient one?" he asked.
Mr Mansur said the challenge is reallocation of available resources to the bests and that's what "we are failing it". 'We are wasting our resources."
Former Finance Minister M Syeduzzaman said that according to the analysis of Boston Consulting Group, Bangladesh's middle-class is most high-paying class for consuming consumer goods.
Dr Mirza Azizul Islam said that tariff protection to any sector cannot be given for an unending period.
After giving the protection for a certain period the performance has to be reviewed, he added.
He said there were 1,400 non-apparel exports in 2017. "But why are those not scaling up? Is it because that they do not get same type of incentives that apparel gets. We have to identify the reasons," he said.
PRI vice chairman Sadiq Ahmed, SANEM executive director Dr Selim Raihan and PRI research director Dr M A Razzaque, and former chairman of National Board of Revenue Abdul Majid spoke, among others.
