Proposed budget execution a challenging task: MCCI

The Metropolitan Chamber of Commerce & Industry (MCCI), Dhaka thinks implementation of the proposed budget for the next fiscal year is a highly challenging task in the present context of the economy.

"There is a growing imposition of tax burden on individuals and businesses who fulfil their tax obligations regularly. MCCI strongly emphasises the need for a proper resolution of the matter," Kamran T Rahman, president of the MCCI, said in a reaction on the proposed national budget for 2024-25.

For the budget to be effectively executed, the chamber opines that there are further prospects to optimise the management of the budget, reform tax policies, automate the tax system, reduce system loss in overall tax collection, enhance tax administration capacity and deliver adequate services to the public.

The leading chamber has consistently recommended significant structural reforms in tax administration to enhance effective revenue collection.

In the present framework, a considerable number of qualified entities with high income remain outside the scope of taxation, the MCCI president said.

The final budget deficit is likely to widen because of ongoing tax reform conditions imposed by the International Monetary Fund (IMF), he said.

Under the IMF loan conditions, the tax-GDP ratio is expected to rise to 8.8 percent, potentially increasing the tax burden on taxpayers, he commented.

The MCCI is also apprehensive about the potential impact of increasing inflation on future business expansion, Rahman said.

The budget for 2024-25 fiscal year should concentrate on pro-poor and inclusive growth, the leading trade body said.

It is crucial to increase the support given to the needy through the social safety net significantly, it said.

The chamber believes that economic growth continues to face significant obstacles because of underdeveloped communication systems, infrastructure, and bureaucratic complexities.

In light of the escalating import trend and the current global crisis, it is crucial to implement precautionary measures in foreign exchange expenditure for maintaining macroeconomic stability, it said.

It also said the excessive subsidies on electricity, gas and fertiliser prices need to be regulated. Otherwise, the subsidy cost could further increase significantly.

The chamber applauded the decision to reduce the corporate tax rate by 2.5 percentage points for unlisted companies and one-person companies.

However, MCCI is proposing a decrease in this rate for other listed companies as well.

In light of this, the trade body foresees companies being motivated to comply with tax payments.

The chamber expressed concern that the proposed increase in supplementary duty rates on imported goods could lead to an upward trend in the cost of living.

Given the present circumstances, MCCI held the view that the current inflation target is not realistic.

The MCCI also praised the government for extending the tax exemption on information technology-enabled services until June 30 of 2027.