AS the new budget is knocking at the door businessmen demanded that the government take certain fiscal measures to protect domestic “infant industries” from fierce competition by imported finished goods and make the local industries competitive in the export market. They demanded reduction of the duty on import of capital machinery and raw materials so as to boost investment in the country. Business leaders also urged the government to ensure political stability, provide gas and electricity connections, develop infrastructure and lower the interest rate of bank loans to single digits in a bid to create a favourable environment for investment.
The Federation of Bangladesh Chambers of Commerce and Industry – an umbrella organization of businesses of all strands recommended a set of 617 proposals related to income tax, customs duty and value-added tax for the budget for the financial year 2014-15. The key hypothesis of their argument is that an appropriate protection to the domestic industries would create more employment opportunities through increasing production and export. The FBCCI in its written proposals demanded the NBR keep at least a 30 per cent to 40 per cent difference on taxes between imported finished products and locally manufactured ones to make the local industries competitive.
We also agree that the NBR should bring commercial activity of non-governmental organisations under the tax net. There is every reason to believe that these NGOs’ are doing full fledged business activity in the name of development work and enjoying tax exemptions. We found the FBCCI’s demand of tax rebate for the prioritized sectors including power, infrastructure development, environment protection, human resource development, agriculture and rural industry, small poultry, hatchery, dairy farm and for setting industries in the country’s underdeveloped regions to be very considerate and well drafted.
However, we don’t believe that business leaders’ demand of reduction of corporate tax for large companies to encourage local and foreign investment in the manufacturing sector is justified, and in our view, it is a distorted over simplification. We have seen opinions from renowned economists that this step, if taken, will only benefit the corporate bosses and this alone cannot increase investment.
It is very natural that where there is a conflict of interest there will be different sets of priorities. But for the common good of the nation we must come to common terms about some fundamentals. We believe that the businessmen’s recommendation that the government should set an interest rate ceiling on savings for banks to reduce the existing higher interest rate on loans to boost investment, their demand of withdrawal of duty and VAT on imports of capital goods, are not all well thought of. What we feel is that the government would need revenue earnings to run its business as usual for the public good and naturally should not create more opportunities for the already privileged sections of the society of which the business community is a predominant one. We suggest that there should be a rational, balanced and domestic business friendly fiscal policy.
