Budget to spur entrepreneurship

The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has welcomed the proposed national budget for the upcoming fiscal year, saying some of the steps will help entrepreneurs.

However, it opposed several proposals that would affect businesses adversely.

"The proposed budget would be helpful to the development journey of Bangladesh amid the current crisis," said Md Jashim Uddin, president of the FBCCI, at a post-budget media briefing at the conference room of the apex trade body of Bangladesh yesterday.

The federation has identified the main challenges for the budget implementation. They are ensuring good governance, proper monitoring, raising investment, and attaining revenue generation goal.

"Bangladesh's tax-to-GDP ratio is not rising," Jashim said.

The revenue collection has risen in the current fiscal year on the back of higher import duty receipts amid increased prices of imported products.

In order to generate more revenues, the FBCCI suggested making tax policies business-friendly and automating the collection system.

"We recommended expanding the tax net several times, but the NBR is stabbing existing taxpayers. But don't kill the goose that lays eggs," said Jashim.

The apex trade body recommended accelerating the use of external financing to meet the budget deficit, instead of relying on the banking system.

"A huge government borrowing can crowd out the private sector," said Jashim.

The FBCCI said the budgetary proposal to increase the tax on bank deposits was not a logical move since it would encourage people to keep their cash in hand or under the pillows.

In order to remove tax disparities among the export-oriented sectors, the finance minister has proposed a uniform rate for all exporters – a move that the FBCCI has described as praiseworthy.

"It will help diversify exports," said Jashim.

Similarly, the corporate tax rate cut by 2.5 percentage points will increase competitiveness, he said.

"However, the reduction will not fetch major benefits since the advance income tax and advance tax have remained unchanged. Thus, the government is taking more from us compared to what it is giving," Jashim said.

The FBCCI has long been calling for the elimination of the advance income tax and advance tax because they increase the cost of production since refunds are not made properly.

"But no steps have been taken to this effect. I don't realise why the NBR has to collect a tax that it has to refund," said Jashim.

The budget has proposed to bring down the turnover tax for startups to 0.10 per cent from the existing 0.60 per cent, which is a commendable initiative, said the FBCCI. 

"The government can exempt all types of start-ups from paying the direct tax for three to five years," said Jashim.

The cut in VAT for restaurants as well as for the companies producing sari, lungi, paper, coil, sugar, motor vehicle equipment and some other products is a positive move, according to the FBCCI.

The trade body called for raising the tax-free income limit to Tk 4 lakh from the current threshold of Tk 3 lakh, considering the higher prices of essentials in Bangladesh.

The FBCCI urged the government to keep the source tax on export proceeds at the current level of 0.50 per cent instead of raising it to 1 per cent as proposed in the budget.

It termed the proposed import duty on solar panels and the VAT on laptop imports illogical.

"Though laptops are produced locally, their quality is not up to the mark. The VAT will deter the digitalisation process of the country," said Jashim.

"Entrepreneurs have not made such recommendations. Who are the NBR giving protection to?" he asked.

Mostofa Azad Chowdhury Babu, senior vice-president of the FBCCI, MA Momen, vice-president of the trade body, Rizwan Rahman, president of the Dhaka Chamber of Commerce and Industry, and Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, were present at the media briefing.