Sayed Tosharaf Ali :
Discriminatory VAT imposing pushed environment-friendly auto brick factories in edge while the polluting brick-kilns getting government’s blessing by fixing less tax, stakeholders said.
Experts said, government is blessing the air polluting traditional brick kilns and imposing high tax on environment-friendly auto brick factories.
It makes entrepreneurs reluctant to establish environment-friendly auto brick factories.
On the other hand, traditional brick kilns expanded day after day instead of shutting down. As a result, the ways of getting clean air is becoming shrinking day after day.
At the same time, the government losses about Tk 2000 crore annually by fixing less VAT on traditional air pollution oriented brick kilns.
When contacted, eminent environment expert Professor Dr. Ahmad Kamruzzaman Majumder of the Department of Environmental Science at Stamford University told The New Nation on Sunday, “Government should rethink the VAT structure on brick factories to save the interest of environment friendly industries.”
He said, if the government discriminates against environment friendly auto brick factories, none would be encouraged to establish such industry.
He suggested the authorities to give intensives to the auto brick factories for the sake of keeping environment pollution free.
It was found that traditional brick kilns are required to pay a fixed annual VAT of approximately Tk 4.5 to 5 lakh, which they pay in three installments.
In practice, however, each kiln declares production of 1 million (10 lakh) bricks per year, but actually produces an average of 5 to 6 million (50 to 60 lakh) bricks annually. Had VAT been collected based on actual production, each kiln would have had to pay over Tk 25 lakh in VAT.
In that case, the government supposed to collect Tk 2,000 to 2,500 crore in revenues from around 9,000 traditional kilns. Currently, the government receives only a little over Tk 400 crore.
On the other hand, environment-friendly modern auto brick factory owners are required to pay VAT calculated per brick, resulting in an estimated VAT of Tk 3 to 7 lakh per month. “This is completely irrational and discriminatory,” commented an auto brick factory owner.
One of the essential components of infrastructure development-brick manufacturing-is conducted in two different methods: the traditional method and the modern automated method.
According to available information, Bangladesh currently has eight to nine thousand traditional brick kilns that are not environment-friendly, and 122 modern, technology-based, environment-friendly auto brick factories.
Leaders of the Bangladesh Auto Bricks Manufacturers Association (BABMA) have repeatedly informed the government and concern authorities about their problems, but they have not taken any effective measure to solve their crisis.
While investigating the matter, The New Nation found that although the government, in principle, promotes the auto brick industry to protect the environment and tackle climate change related troubles, in practice it follows a discriminatory VAT policy that is pushing the auto brick sector towards collapse.
Many factories have already shut down, and many others are on the verge of closure.
Owners are unable to repay bank loans, salaries of workers and employees are overdue, workers are losing their jobs, and banks are struggling to recover their loans.
While looking into the issue of VAT discrimination
BABMA President Md. Abul Hossain said that it has become impossible for them to operate their factories under such heavy VAT pressure. In this regard, they have submitted several recommendations to the government.
In an application submitted to the Secretary of the Ministry of Environment, Forest and Climate Change on 13/03/25, they outlined the following demands:
1. Auto brick factories should be formally recognized as an industry. For environment-friendly factories using Tunnel Kiln and Hybrid Hoffman Kiln technology, bank loan interest rates should be reduced to 9%.
A business recovery program should be introduced for industries harmed by high interest rates. Existing loans should be allowed to be rescheduled for easier repayment. Additionally, this environment-friendly industry should be reclassified from the Orange category to the Green category.
2. To eliminate discrimination, both modern and traditional brick manufacturing methods must be brought under a uniform VAT structure.
VAT must be collected based on actual production, monitored regularly.
3. VAT registration and environmental clearance should be made mandatory for all brick kilns, and strict enforcement must be ensured. Illegal brick kilns violating environmental laws must be shut down.
4. Since auto brick factories are environmentally friendly, they should be considered a national priority sector.
They should be given the opportunity to purchase soil excavated during government-run river and canal dredging programs, as well as soil removed during various construction works.
5. Auto bricks must be included in the international carbon trading market. Industries that successfully reduce carbon emissions should receive special financial incentives.
6. To reduce air pollution and protect forests, carbon emissions must be strictly controlled.
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