Kazi Zahidul Hasan :
The outgoing FBCCI president on Monday urged the government to bring a major overhaul in the tax policies in the upcoming budget to spur investment and encourage exports.
“The government should introduce tax reform measures to lower taxes on businesses, export-oriented industries and individuals in the next budget with a view to boosting investment, consumption, and create more jobs,” outgoing President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) Md. Shafiul Islam (Mohiuddin) told The New Nation yesterday in an interview.
He said the country’s apex trade body has already placed budget proposals (for the fiscal year 2019-20) before the National Board of Revenue (NBR), suggesting several areas of reforms in the existing tax policy.
“We have proposed upward adjustment of tax-free threshold for individual taxpayers, reduction in the corporate tax rates and withdrawal of advance tax for import of raw materials for the upcoming budget,” said Mohiuddin.
He said FBCCI sought corporate tax reduction by at least 2-percentage point across the Board to lure more local and foreign investment. “Bangladesh has the highest corporate tax rate among the South Asian countries. So, reform in the corporate tax is necessary to support investment,” he said.
The country has eight rates of corporate taxes, starting at 25 percent for listed companies and going up to 45 percent for cigarette manufacturers.
Some 35 percent tax is applied to non-listed companies and higher rates of taxes are slapped on banks, financial institutions and mobile phone operators.
In contrast, tax rates in South Asian countries, including India, hover between 15 percent and 30 percent.
The FBCCI also proposed to make the thresholds for tax-free ceiling upward to Tk 3,50,000 from existing Tk 2,50,000 for individual tax-payers and to reduce the turnover tax rate by one percentage point to 3.0 per cent from 4.0 per cent.
Regarding new VAT law, the outgoing FBCCI leader said that the authorities had already assured the business community of introducing multiple rates of VAT instead of uniform rate of 15 percent.
“We hope the reforms in new VAT law would be reflected in the new budget,” he said.
Citing the country’s stagnant investment scenario as a major cause of concern for economy, Mohiuddin urged the government to take a slew of measures to revive the current investment cycle.
“We see public investment keeps growing, but a sluggish trend prevails on private investment scenario causing concern for the economy. So, the prime focus of the new budget should be promoting investment. It would not be possible to create enough jobs and accelerate economic growth without higher foreign and local investment,” he added.
Mohiuddin also mentioned that cut in interest rates on bank loan is also necessary to boost private sector investment. “The government has already taken a number of initiative to promote investment. Many measures are on the cards to deal with the sluggish private investment.”
He noted that revenue collection would increase in the long run because of increased investment.
“The new budget should also offer incentives for the export-oriented industries and at the same time, adopt policy measures to protect local industries,” he added.
Mohiuddin observed that the country’s overall export continues to maintain a solid growth in the current fiscal. But dark cloud shrouds over the export sector following closure of about 1,200 export-oriented garment factories in the last few years.
“So, the new budget should look for a higher incentive by reducing tax burden on the apparel manufacturing units to help them survive,” he added.
Mohiuddin also suggested increasing NBR’s revenue income from widening tax-net instead of increasing the tax burden on existing tax-payers.
He also urged the NBR to create a hassle-free environment within the tax administration so that the tax-payers can feel free to submit their tax returns.
