Kazi Zahidul Hasan :
Business leaders have expressed unhappiness with the proposed budget for the fiscal year 2016-17, as the Finance Minister ignored wish lists of the business community while presenting it.
“Business community is unhappy with the proposed budget as it did not reflect their wish lists,” Md Shafiul Islam Mohiuddin, Senior Vice-President of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), told The New Nation on Thursday.
He said the FBCCI, on behalf of business community placed several demands four months before the announcement of the proposed budget. But those demands were largely ignored by the Finance Minister, disappointing them.
“Some tax measures proposed in the budget, if not reviewed before the passage of the budget, would definitely affect the growth of manufacturing as well as SME sector,” he added. Describing the proposed budget as ‘big and expansionary,’ Mohiuddin said the ambitious spending plan sets in the next budget will largely depend on the government’s ability to mobilise foreign fund and strengthening the revenue collection.
“The government has set a big revenue collection target for the next fiscal and to this endeavour more tax has been imposed on businessmen and export proceeds (tax at source) causing concern to the business community,” he said.
The FBCCI leader further said the enhanced tax at source will put a further financial burden on export-oriented industries, especially the garments sector, when it has been facing a tough time in the recent years on the labour and compliance issues.
Regarding the VAT collection, Mohiuddin said, the government has proposed new formulas on VAT collection for small businesses making the whole thing complicated. If the new system is implemented, it would pave the way of corruption by the taxmen while collecting VAT from traders.
“We have mixed reaction on the proposed budget because it has both positives and negatives for the businesses. The next budget proposed enhance allocation for development infrastructures, agriculture, education, human resources and implementation of mega projects, but it also lacked initiatives for accelerating private investment, industrial growth and job creation,” he observed.
“We have many discontents over the proposed budget and we will express them formally through a media briefing next Saturday,” he said.
“The proposed hike in tax at source to 1.5 per cent from current 0.6 per cent on export is high and abnormal,” Mahmud Hasan Khan Babu, Vice-President of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) told The New Nation on Thursday.
“Both industrial and export growth will face serious challenges if the proposed tax at source is enrolled from the next budget,” he said.
Babu said garment exporters have been demanding a reduction in tax at source on exports to 0.3 per cent from the current 0.6 per cent. But Finance Minister AMA Muhith has now proposed a 1.5 percent source tax on all kinds of export proceeds, causing much dissatisfaction to the garment entrepreneurs.
He, however, welcomed the proposal to reduce the corporate tax rate for the garment sector to 20 per cent from 35 per cent, Tk 4,500 crore budgetary allocations for export incentive, continuation of concession on import of capital machinery and duty-free import of fire fighting equipment and pre-fabricated building materials.
“The proposed budget has set a big revenue collection target which will be a major challenge for the government,” Syed Nasim Manzur, President of the Metropolitan Chamber of Commerce and Industry (MCCI) told The New Nation yesterday. He suggested that to attaining the revenue target tax compliant enterprises should not be burdened with additional tax. The government should open up new avenues of tax collection instead of slapping new tax on tax compliant companies.
Expressing disappointment over the energy crisis, Nasim Manzur said, “The budget lacks measures to ease the current energy and gas crisis. We earlier urged the government that businesses suffering from low gas pressure to be exempted from the minimum charge. But no proposal was made in this regard. “We also urged the government that the tax-free threshold for individual’s income has to be increased. But proposal was made to keep the threshold unchanged,” he added.
Nasim Manzur further said that we expected that our proposals should be reflected at the national budget but the government did not take into account to these making them unhappy. He, however, welcomed the proposal of implementing the new VAT law from July next year instead of this July due to a lack of necessary preparation.
