Budget ambitious, but achievable: Ficci

The Foreign Investors' Chamber of Commerce and Industry (FICCI) has appreciated the targets set by the proposed national budget, but it expressed concern over the extra duty and tax imposed on telecom, carbonated beverages and water purifiers.

The government's target of achieving 6.75 percent growth in gross domestic product and bringing down inflation to 6.5 percent in 2024-25 are ambitious but achievable with an effective execution plan, the Ficci said today.

The proposed reforms, especially in income tax and customs, aim to enhance revenue, reduce deficits, and enhance investor confidence, it said.

But the extra duty and tax imposed on telecom, carbonated beverages and water purifiers pose a crucial challenge to the profitability and viability of these businesses and it will hamper attracting potential foreign direct investment for Bangladesh, the chamber said.

Ficci President Zaved Akhtar shared the observations at a post-budget press meet organised by the chamber at Pan Pacific Sonargaon in Dhaka.

The Ficci welcomed the acceptance of their proposed amendments in the Finance Bill 2024, particularly the prospective tax rate, fulfilling a long-standing demand from the business community.

"Maintaining these rates will enable businesses to plan and invest effectively," the chamber said in a statement.

Additionally, the Ficci expressed gratitude for the acceptance of their proposed amendment simplifying tax deduction at source for industrial raw materials.

The extension of time for monthly withholding tax return submission is also crucial, which was accepted through the Finance Bill 2024, the trade body said.

The Ficci appreciated the tax reforms in the proposed budget to simplify the tax system, but the high effective tax rates remain a key concern for the industry.

While they appreciated the 15 percent income tax rate for private funds, the Ficci noted concerns about exempting public funds from taxation, creating disparities between government and private sector employees.

Detailed implications of deficit financing are crucial, such as potential higher interest rates and the need for a balanced approach to ensure fiscal stability.

The removal of incentives from private economic zones and high-tech park while keeping incentives for government economic zones may erode investor confidence.

The National Board of Revenue has proposed an increase in personal income tax rate, which may be seen as unfair by regular taxpayers and could inadvertently encourage tax evasion, it said.

Such changes in tax slab will discourage compliant taxpayers as they are being penalised for their hard-earned money, the chamber said.