The import duty on 3,346 items including a number of essentials is set to drop by one per cent but on all kinds of vehicles to mount by about 10 per cent in the new budget, official sources said.

In the budget for 2006-2007 the finance and planning minister, M Saifur Rahman, tables at the Jatiya Sangsad Thursday, supplementary duty on a number of items is also likely to be slashed by about five per cent, sources said.

Of the 3,346 items, the import duty on 1,483 ones that currently is six per cent is likely to be proposed at five per cent in the budget. The 13 per cent duty on the remaining 1,863 items is likely to be reduced to 12 per cent

The duties are to be reduced mostly on essential commodities like rice, onion and garlic, and industrial raw materials. The essential items also include dried chili, cereals, wheat, salts, cashew nuts, fresh fruit, cow, cocoa beans, chocolate, and wool.

Besides, animal hair, cotton and yarn, about 50 kinds of chemical elements, metals used in the industry, about 30 kinds of organic chemicals, pharmaceutical raw materials, oils for perfumery, raw materials for soap industry, photographic goods, and polymers for plastic industry are also to get one per cent import duty reduction.

The duty slash would benefit the local industries and appease the multilateral donors like the World Bank and the International Monetary Fund, sources said.

The WB in early 2006 asked the government to reduce the existing duty by two percentage points and eliminate the para-tariff barriers.

However, the current ceiling of 25 per cent import duty would not be changed, sources confirmed. With the possible changes in the current import duty rates, the slabs are going to be fixed at 5, 12 and 25 per cent, which are now 6, 13 and 25 per cent.

According to sources, duties on vehicles irrespective of size are likely to be increased by about 10 per cent in the ensuing budget. So, both new and reconditioned vehicles would be costlier.

Currently 101 per cent duty – including import duty, supplementary duty, infrastructure development surcharge and advance income tax -- are charged for importing vehicles up to 1649CC, 149.19 per cent for vehicles from 1649CC to 3,000CC, and 194.50 per cent for vehicles above 3,000CC.