Industrial effluent and waste from urban sewage “is severely contaminating our rivers and taking heavy toll on the aquatic environment and its surroundings”, Finance Minister A M A Muhith said as he announced the budget in parliament.

“I propose to impose a 1% Environment Protection Surcharge or Green Tax on an added-value basis on all kinds of products manufactured in Bangladesh by the industries which pollute the environment,” Muhith said.

A revenue official told AFP the tax would be imposed on a company’s turnover if it is found to have polluted “air, soil and water”. Muhith also announced tax exemptions for the country’s 6,000 brick factories if they build environmentally friendly kilns.

The budget is the first since prime minister Sheikh Hasina’s centre-left government was re-elected in January polls marred by widespread fraud and a boycott by opposition parties.

Bangladesh is one of the world’s most polluted nations and Muhith said the green tax would “get rid of this situation” and encourage industries “to set up effluent treatment plants”.

Factories currently face one-off fines if they are found in breach of pollution standards, but bosses often bribe inspectors to turn a blind eye.

The new tax would mostly affect the powerful textile and leather processing industries that often pour untreated effluent straight into the country’s rivers.

There are around 200 hide-processing factories based in the Hazaribagh district of Dhaka but none of them have effluent treatment plants.