The Metropolitan Chamber of Commerce and Industry (MCCI) has called for ensuring effective financial management in the budget for FY23, to limit expenditure on government projects and exploring low-cost international funds as the deficit could rise due to the global economic crisis.
It also recommended tightening financial management, such as stopping unnecessary over spending, wastage, and other leakages of funds, which in turn will yield significant amount of savings, read a press release issued by MCCI President Saiful Islam on Thursday.
The release added that the future economic disruptions besides the current ones caused by the pandemic can actually increase the final budget deficit.
The government should not hesitate to increase the deficit if it is required for essential expenditure, infusing funds into the economy and to tackle the rising domestic demand. It must look beyond the banking sector for financing this deficit.
With Bangladesh’s ample borrowing headroom, low cost international funding could be explored further, it adds.
The MCCI called for government measures to keep prices of energy, food, fertilisers under control in the upcoming financial year. The chamber also thanked the government for focusing on inflation containment, agriculture and overall food security, human resource development, including health, education, and skills development, boost in domestic investment, increase in exports, and promotion of export diversification, and job creation and rural development.
The chamber believed that there is plenty of scope for reforming the tax policy, increasing the capacity of tax administration, and providing proper public services.
The release pointed out that the MCCI has always suggested meaningful structural changes in the tax administration so that it could aptly carry out revenue collection.
For technological upgradation, special low-cost funds should be created in line with 4IR and 8th Five Years Plan enabling export-oriented industries to improve their capacity and efficiency. The size of the Export Development Fund (EDF) needs to be raised to at least $10 billion from $7.5 billion and should be accessible to all the exporters.
In the proposed budget, the allocation of social safety nets is Tk 1, 13,576 crore, which was Tk 1,07,614 crore in FY22. The MCCI stated that the allocation only rose by Tk 5,962 crore, which was not enough.
So the chamber proposed a significant increase in social safety nets in the final budget.
MCCI is disappointed to see personal income tax thresholds remain unaddressed in the budget. Bangladesh must raise and align the tax-free income thresholds, proposes the MCCI, while recommending the tax-free income threshold to be at least Tk 500,000.
The chamber also appreciated the budgetary provision for a study on central bank digital currency, as well as exploring the means to introduce digital banks.
It however expressed its deep concerns about allowing indiscriminate opportunity of whitening black money by paying a certain amount of tax.
“In the past, we have seen such opportunities yield little results, while unnecessarily raising questions about the probity of our financial and accounting practices. The cost benefit analysis will show a higher cost with almost zero benefits. This will seriously discourage the compliant taxpayers, who will consider it penalising,” the press release read.
The MCCI feels that there should be an interim evaluation of the Budget after every three months. Finance Minister AHM Mustafa Kamal had placed the Tk 6,78,064 crore national budget for FY23 in Parliament on Thursday.
