Economic Reporter :
The Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) has expressed dissatisfaction over the increase in advance income tax (AIT) from 5% to 20% in the proposed budget for the forthcoming 2021-2022 fiscal year.
The country’s apex trade body fears this hike in the AIT may bring businesses to a standstill.
As business operating expenditures increase due to the AIT, the FBCCI had earlier placed a proposal to remove the existing advance tax in the interest of the business community.
In a post-budget press conference on Saturday, the organisation, however, expressed contentment over the budget proposals in general, except for a few like the AIT hike, and extended thanks to the government for formulating a business-and investment-friendly budget.
In the proposed budget, the rate of business turnover tax for individual taxpayers has been reduced from 0.50% to 0.25%. The FBCCI urged the government to make the rate effective for all businesses. Besides, advance tax (AT) on imports has been reduced from 4% to 3%, even though the FBCCI had earlier recommended that the tax be withdrawn fully. The federation thinks advance taxes are scaling up business operating expenditures.
Noting that the tax waiver privilege on software and IT facility sales is revoked in the new budget, the FBCCI said the decision should be reviewed to make the IT sector flourish.
Additionally, all e-commerce services should be kept out of the source tax net for at least one year so that the small entrepreneurs are encouraged.
The federation also asked for withdrawal of the 15% tax imposed on private universities, medical colleges, dental colleges and engineering colleges, citing that the education system has already been affected to a great extent by the Covid-19 pandemic.
Apart from that, the apex organisation of businessmen urged the government to facilitate import of river dredging machineries with a tax of 1% in an effort to increase navigability in the rivers and expedite implementation of the Delta Plan.
The federation applauded some initiatives proposed in the budget, which include focus on skills development, tax cut facility for companies with 10% of employees from the third gender community, and others.
The proposed budget has a deficit of around Tk2.14 lakh crore, which is 6.2% of the GDP. Of the total amount, the government will arrange Tk1.13 lakh crore from internal sources – Tk76,000 crore from the bank system and Tk32,000 crore from savings certificates.
But, the FBCCI urged the government to meet the budget deficit from foreign sources and special local bonds, instead of taking out loans from local banks.
The federation appreciated the government moves taken to attract more investments and protect local industries.
In the new budget, the social safety net has been expanded to deal with increasing unemployment and income cut due to Covid-19 pandemic, in addition to gearing up other ongoing safety measures. The federation appreciated these decisions and expressed hope that these will contribute a lot to the economic recovery.
The long-standing challenges for budget implementation are good governance, proper monitoring, increasing investments and production, and fulfilling the revenue collection target by ensuring a business-friendly revenue system.
The FBCCI said administrative and executive skills, transparency, accountability and upgrading monitoring quality are crucial to overcome the challenges.
