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Expressing concern over the challenges associated with achieving the revenue target amid the current economic shocks, trade leaders called on the government to reconsider tax measures in order to promote industrialisation and private sector growth.
In their budget reaction, they said that the proposed national budget for the fiscal year 2023-24 will help build a “Smart Bangladesh” as it has focused on creating a business-friendly environment to boost the country’s economy.
Finance Minister AHM Mustafa Kamal placed the proposed budget of Tk 761,785 crore for the fiscal year 2023-24 at Jatiya Sangsad on Thursday.
Reforms of tax administration
President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Md. Jashim Uddin said the government set a target of collecting revenue of Tk 5 lakh crore in FY24 which might be a challenge.
He also underscored the need for building capacity of the National Board of Revenue (NBR) to increase revenue earnings. “So, significant reforms of tax administration are crucial.”
He also said, “Withdrawal of Supplementary Duty (SD) on 234 products and Regulatory Duty (RD) on 191 items was proposed in the budget for the next fiscal year starting in July. I think it’s not right decision. It should be withdrawn to protect local industries.”
Replying to a query, Jashim said that local industries should be prioritised taking into account the dollar crisis.
“Some proposals in the proposed budget for FY24 are confrontational as all demands of businesses are not met properly.”
“We need priority to overcome inflation and dollar crisis and protect local industries,” he added.
Budget deficit likely to widen
The Metropolitan Chamber of Commerce and Industry (MCCI) president Md. Saiful Islam said the government has set the budget deficit at Tk 2,61,785 crore for FY24.
The budget deficit is likely to widen because of the conditions set by the International Monetary Fund (IMF). Hence, MCCI advises to adhere to proper financial management to limit expenditure on financing of government projects.
Given the high import trend and the fallout from the Russia-Ukraine war, “We need to take prudent measures in foreign exchange spending to ensure macroeconomic stability.”
MCCI feels that high subsidy on power, gas, and fertiliser prices should be controlled, otherwise the cost of subsidy would increase significantly, he added.
The chamber has expressed disappointment that there is no proposal to revise the terms of cash transactions in terms of corporate tax rates.
“We believe that underdeveloped communication systems and infrastructure, inequitable distribution of utilities, and bureaucratic complexity remain major impediments to economic growth.”
Considering the 80 per cent informal economy of Bangladesh, such conditions are not compatible. MCCI feels that there is a need to rationalise the rate of TDS, considering Bangladesh’s exports in the current global economy.
The chamber also feels that business expenses will increase because of this. It also expressed concern that the increase in tariffs would have a direct impact on the public.
The chamber thinks that the budget for FY24 should focus more on pro-poor and inclusive growth. An assessment of budget implementation is necessary in the current global economic turmoil.
Tax-free income limit should be Tk5 lakh
DCCI President Barrister Md Sameer Sattar said the government has raised tax-free income limit to Tk350,000. But considering the present inflation, it should be increased to Tk 5 lakh.
He also said the government will set a target to borrow Tk 132,395 crore from the banking sector that will hamper the private sector credit flow.
Besides, he suggested using ADR to realise NPL and doing full automation in the VAT collection system.
The DCCI president proposed reducing gas price to rein in the price of fertiliser for the betterment of the agriculture sector. NBR-private sector partnership is crucial to achieve the high revenue target.
He stressed on effective, timely and priority-based implementation of ADP. He said, “We need to focus on import substitute industries and strengthening backward linkage industry to help local industrialisation.”
No good news for housing sector
Real Estate and Housing Association of Bangladesh (REHAB) president Alamgir Shamsul Alamin (Kajal) said if the proposed budget is not revised, the prices of land and flats will increase in future because the proposed budget will increase income tax at source during land registration.
Besides, additional duty has been imposed on at least 10-12 products including cement, stone, tiles, lifts, ceramics, glass, switch-sockets, cables, and kitchenware.
“We, who build flats, are the buyers of those products whose prices will increase. And finally, the price of this product will fall on the flat buyer. REHAB fears that if the prices of these products are not kept bearable, there will be a crisis in the housing industry.”
Due to increase in price of construction materials, decrease in prices of new DAPs, the sales volume has decreased in the entire housing sector.
Already the prices of land and flats have increased. “At this moment, we fear that the increase in taxes on various products will have an adverse effect on the country's economy.”
REHAB calls for revising the proposed national budget for boosting housing industry.
No new incentive for local industry dev
Foreign Investors' Chamber of Commerce and Industry (FICCI) Naser Ezaz Bijoy said there is no new incentive for local industry development the proposed budget for fiscal year (FY) 2023-24, the government has imposed additional VAT for some local manufacturers like smartphone manufacturers, software development and customization.
Naser said the chamber’s proposal for integrated IT strategy, introduction of e-invoicing in line with other developed markets for bringing transparency in revenue collection has not been considered.
“Our concern on customs duty valuation process in line with the Customs Valuation Rules, 2000 has not been addressed in the proposed budget as well,” he also said.
Determine balanced source tax
It is proposed to logically increase the tax rate at source during land registration in the areas under and outside the jurisdiction of RAJUK and Chattogram Development Authority (CDA).
As a result of which different sources of tax may be determined depending on the location, which may cause complications, to avoid this, we propose to determine balanced source tax, Chittagong Chamber of Commerce & Industry (CCCI) president Mahbubul Alam said.
“The budget will help in diversifying exports, creating a business-friendly environment and building a smart Bangladesh,” he also said.
Prudent debt management strategies crucial
American Chamber of Commerce in Bangladesh (AmCham) president Syed Ershad Ahmed said investing in a smart Bangladesh is not just an economic imperative, it is a moral one. By prioritizing the right budgetary allocations in infrastructure, education, technology, energy, and social inclusion, we can build a sustainable, better future for all.
AmCham believes budget execution is what matters in the end and should be measured for quantity and quality, he also said.
“We recommend adoption of prudent debt management strategies that promote transparency, accountability and fiscal discipline,” he also said.
Business-friendly budget
Institute of Chartered Accountants of Bangladesh (ICAB) President Md Moniruzzaman said the proposed budget for FY 24 is business-friendly, and it will help Bangladesh to upgrade gradually to position itself in the middle income group.
“The government should take further steps to expand the tax net as expanding the tax net is badly needed under the current situation for enhancing the tax GDP ratio,” he added.
He also urged for reconsider on expected simplification in refund procedure as it has not been addressed in the proposed budget.
