Next budget should focus on tariff rationalisation

The FY24 budget should be people-oriented and business-friendly to tackle the ongoing economic headwinds, survive in the competitive market, and meet the upcoming challenges, FBCCI President Md Jashim Uddin told The Business Post’s Rafikul Islam in an interview.

The FY24 budget will be unveiled next month. What do you want in the upcoming budget?

Bangladesh has seen huge economic growth during the ruling government. It has also faced various challenges due to the coronavirus pandemic and the Russia-Ukraine war. Besides, we would have to face the post-least developed country (LDC) graduation challenges in future as well. We should consider the overall situation before reforming any policies.

We want tax rationalisation and simplification in the FY24 budget to tackle the ongoing economic headwinds and survive in the competitive market by competing with our competitors. The people have huge expectations from the next budget as our national election is knocking on the door. Considering everything, the upcoming budget should be people-oriented and business-friendly.

Which sectors should the budget focus on to make the economy vibrant?

To strengthen Bangladesh’s position on global indices, it is very important to reduce the cost of doing business. We need to pay special attention to in frastructure development; investment protection, increasing port capacity; ensuring duty management; reducing transportation costs, including shipping; and cutting electricity and energy costs.

In the FY24 budget, we should focus on tariff rationalisation for investment as well as domestic industries and services, including the cottage, micro, small, and medium enterprises (CMSMEs); providing bond facilities in particular sectors for export diversification; keeping commodity prices and supply stable; expanding the tax net through modernising the tax policy, tax system, and management; and reducing economic inequality to increase income and employment.

I also propose giving special focus on human resource development, ensuring technical and work-oriented education, and increasing labour productivity.

What are your recommendations for the next budget to overcome the current business challenges?

Bangladesh has to meet globalisation challenges, including the fourth industrial revolution. We should focus on the manufacturing sector and bringing in more investment. We hope the next budget will be industry- and investment-friendly.

As you always talk about taxes, what are your proposals in this regard?

The government should quickly implement digitalisation initiatives, including the national single window (NSW) project, to speed up the process of taxation, product unloading at ports, and all kinds of customs and tax payments.

A trade facilitation department at the National Board of Revenue should be formed so that revenue collection and tax policy formulation are separated. We hope harassments in tax collection will stop soon. The process of reimbursing source tax and advance tax in the industrial sector, including exports, should be changed to reduce costs and time.

The FBCCI proposes facilitating the supply of electricity, water, and gas at tax-free, subsidised rates to the export and industrial sectors in order to accelerate growth.

We also recommend abolishing the existing tariff price and minimum value-related notification, which is conducive to money laundering and contrary to the best international practices. This should be replaced with a transaction value system.

Amid the current high inflation, what are your suggestions for controlling the prices of daily essentials?

We suggest deducting tax at source at 2 per cent on the supply of essential commodities, such as rice, wheat, potato, onion, garlic, lentil, flour, edible oil, sugar, all types of fruits, etc. We also propose excluding all types of daily essentials from the ambit of tax deducted at source.

Besides, the FBCCI proposes gradually reducing the rate of advance income tax (AIT) at the import level to 3 per cent from 5 per cent. This will cut the operating costs of industries.

Considering inflationary pressure, do you think the tax-free income limit for individuals should be increased in the next budget?

The cost of living has increased highly in the country. Considering the current inflationary pressure and the overall economic situation, the tax-free income limit for individual taxpayers should be increased to Tk 4 lakh from the existing Tk 3 lakh. Also, the limit should go up to Tk 4.5 lakh from Tk 3.5 lakh for women.

Bangladesh will graduate from the LDC status by 2026. What are your recommendations for competing in the global market in the post-LDC period?

The government should find out the rules and regulations related to customs, VAT, and income tax that will be inconsistent with the World Customs Organisation (WCO), the World Trade Organisation (WTO), and the best international practices after the LDC graduation. Then it should reform those. The revenue administration should be made more business-friendly.