A budget to stimulate entrepreneurship | The star of the day
The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has welcomed the draft national budget for the coming financial year, saying some measures will help entrepreneurs.
However, he opposed several proposals that would negatively affect businesses.
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“The proposed budget would be helpful for Bangladesh’s development journey amid the current crisis,” FBCCI Chairman Md Jashim Uddin said during a post-budget press briefing at the conference hall of the Supreme Trade Body of Bangladesh yesterday.
The federation has identified the main challenges for the execution of the budget. They ensure good governance, adequate monitoring, increase investments and achieve the revenue generation objective.
“Bangladesh’s tax-to-GDP ratio is not increasing,” Jashim said.
Revenue collection has increased in the current fiscal year due to higher import duty revenue amid rising import prices.
In order to generate more revenue, FBCCI suggested making tax policies business-friendly and automating the collection system.
“We recommended expanding the tax net many times, but the NBR is stabbing existing taxpayers. But don’t kill the goose,” Jashim said.
The apex trade body recommended accelerating the use of external financing to fill the budget gap, instead of relying on the banking system.
“Huge government borrowing can crowd out the private sector,” Jashim said.
FBCCI said the budget proposal to increase the tax on bank deposits was not a logical move as it would encourage people to keep their money close at hand or under their pillows.
In order to remove tax disparities between export-oriented sectors, the Minister of Finance has proposed a uniform rate for all exporters – a measure that the FBCCI has called commendable.
“It will help diversify exports,” Jashim said.
Likewise, cutting the corporate tax rate by 2.5 percentage points will increase competitiveness, he said.
“However, the reduction will not bring major benefits since the withholding tax on income and the withholding tax have remained unchanged. Thus, the government takes more from us compared to what it gives,” said Jashim. .
FBCCI has long been calling for the abolition of withholding tax on income and withholding tax as they increase the cost of production since refunds are not made correctly.
“But no action has been taken on this. I don’t understand why the NBR has to collect a tax which it has to reimburse,” Jashim said.
The budget proposed to reduce turnover tax for startups to 0.10% from the current 0.60%, which is a laudable move, FBCCI said.
“The government can exempt all types of start-ups from paying direct tax for three to five years,” Jashim said.
The reduction in VAT for restaurants as well as companies producing sari, lungi, paper, coil, sugar, automotive equipment and some other products is a positive step, according to the FBCCI.
The trade body has called for raising the tax-free income limit to Tk 4 lakh from the current threshold of Tk 3 lakh, given the higher prices of basic necessities in Bangladesh.
The FBCCI urged the government to maintain the withholding tax on export earnings at the current level of 0.50% instead of raising it to 1% as proposed in the budget.
He called the proposed import duties on solar panels and VAT on laptop computer imports illogical.
“Although the laptops are produced locally, their quality is not up to par. The VAT will discourage the country’s digitization process,” Jashim said.
“The contractors made no such recommendations. Who does the NBR give protection to?” He asked.
Mostofa Azad Chowdhury Babu, Senior Vice President of FBCCI, MA Momen, Vice President of Trade Body, Rizwan Rahman, President of Dhaka Chamber of Commerce and Industry, and Mohammad Hatem, Executive Chairman of Manufacturers and Exporters Bangladesh Knitwear Association, were present at the press conference.