MCCI for prudent tax measures to stabilise macro economy

Economists and business leaders on Saturday urged the government to take prudent measures to stabilise macro economy as high inflation is hitting the country’s general people hard.

In order to provide proper services to the people, they suggested tax policy reforms, automation of tax system, reduction of overall system loss in tax collection, and strengthening the capacity of tax administration.

The experts came up with the recommendations at a post-budget 2023-2024 discussion, titled “Bangladesh from Vulnerability to Resilience and Rapid Inclusive Development”, jointly organised by Metropolitan Chamber of Commerce and Industry (MCCI) and Policy Research Institute (PRI) at MCCI auditorium in Dhaka.

At the event, PRI Chairman Dr Zaidi Sattar said US-China decoupling is creating a huge opportunity for the Bangladesh RMG exporters. A strategy for capturing new markets should be formulated jointly by the government and the BGMEA.

“FDI is another activity moving out of China. This is also an opportunity to make our country FDI-friendly,” he added.

In order to be prepared to overcome all challenges after the country’s LC graduation in 2026, the economist recommended to rationallise tariffs to remove anti-export bias, set in motion all positive forces to stabilise balance of payments, and boost export, remittances, and FDI, diversify exports.

He said sanction impacts a country’s domestic economy. However, inflation can be controlled through prudent management.

MCCI Senior Vice-President Kamran T Rahman said that to implement the budget properly, there should be an interim evaluation of the budget after three months.

He also expressed disappointment that there is no proposal to revise the terms of cash transactions in terms of corporate tax rates.

PRI Vice Chairman Dr Sadiq Ahmed found out four major challenges in the budget for FY24, which are restoring macroeconomic stability; the challenge of revenue mobilisation; prudent financing of the budget deficit; and protecting social sector spending.

MCCI Board Member Adeeb H Khan pointed out that few changes had been proposed regarding income tax and VAT.

He said as the new Income Tax Act is going to be placed in the parliament soon, I urge the government to give all stakeholders sufficient time for review the draft.

He also termed the increase in surcharge payable by individual assessees to be helping the high-income groups.

Adeeb said the environmental surcharge has been imposed on the owners of multiple motor cars, but not for the owners of trucks and buses that pollute the environment more.

Speaking as the chief guest at the event, Planning Minister MA Mannan said, “The proposed budget for fiscal year 2023-24 is a budget of announcing to remove subsidies. But we will continue subsidy on foods and agriculture sector.”

Supporting the idea of the appointment of tax collecting agents, the minister said, “It would create employment, but it had to be done in a gradual and systematic manner.”

About countering inflation, he said that Bangladesh would have to be selective with its imports.

He also emphasised that VAT had been exempted on certain food items to make it easy for the people.

He agreed about the need for communication and consultation with the business community before the passing of the new Income Tax Act 2023.