New income tax to deal a blow to poultry trade

Poultry traders have demanded the withdrawal of new income tax levied on feed production, fearing the hike could land the troubled sector into further crisis.

Poultry farmers and industry group said Saturday that a 5.0 per cent income tax on poultry feed producers should be lifted to help survive the sector, still reeling from the impact of the spread of avian influenza virus.

The Finance Bill 2010 has withdrawn tax exemption facilities on pelleted poultry feed and has imposed five per cent revenue on the income of poultry feed producers.

Moshiur Rahman who heads the national coordination committee on poultry said the government should extend the tax exemption facility up to 2015 to help prevent businesses get out of the business.

In 2008, he said the government extended the income tax holiday till June 30, 2011, but the new budget has imposed it ahead of the expiry of the facility.

"The new taxes will affect the country's vulnerable poultry industry much. Besides, new investment to this sector will be hampered," Mr. Rahman, owner of the Paragon Group, told the FE.

President of the Feed Industries Association of Bangladesh Saiful Alam Khan said new income tax on feed producers would push up the prices of poultry birds and eggs in the market, leaving the consumers to bear the brunt.

"Poultry farmers spend nearly 70 per cent on feed. So, the new tax will add costs to the poultry output and therefore the consumers will have to spend more for their protein consumption," he said.

Syed Abu Siddiqui, president of the Bangladesh Poultry Industries Association, warned that the new income tax could force many entrepreneurs out of business while discouraging new investment in the sector.

"The poultry industry is still recovering from the damage of the avian flu attack. In addition, the newly imposed tax will affect the industry severely," he said, adding "It will really be difficult to survive in the business."

Bangladesh's poultry industry supplies huge quantity of meat, enabling people to meet their daily calorie needs.

The deadly virus cost the labour-intensive sector nearly Tk50.0 billion from 2007 through 2008, rendering some 2.5 million jobless, according to an estimate by the trade group.

It said the investment in the sector would amount to Tk 120.00 billion ($1.75 billion), which employs as many as 3.5 million people.

Data provided by the Ministry of Fisheries and Livestock said there were about 150,000 poultry farms in Bangladesh, which together produce 320,000 tonnes of meat and over five million eggs annually.

The flu attack cut poultry production by half and delivered a major blow to the industry, which was growing 15 per cent until 2005, causing a loss of Tk.50 billion over the last two years.