Turn some stimulus into grant: FBCCI

The country's apex trade body yesterday demanded that the government consider giving away a portion of stimulus funds as grants if lockdowns persist in the next quarter, reasoning it was difficult to recover business from the pandemic-induced losses.

The government in April last year announced stimulus packages for banks to disburse low interest loans among industries to aid recovery.

Till date, the government declared Tk 124,000 crore in funds in its bid to shore up the confidence of entrepreneurs in the wake of global and local economic losses.

In a proposal for tax and other measures needed for businesses to recover and grow in fiscal 2021-22, Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) President Sheikh Fazle Fahim urged for considering the grants ranging from 5 per cent to 50 per cent.

He was addressing a virtual meeting jointly organised by the National Board of Revenue and FBCCI as a part of a regular annual exercise to hear views of businesses before the formulation of fiscal measures for a new year.

Top leaders of trade bodies and business chambers, government high-ups, experts, exporters and importers attended the meeting where Finance Minister AHM Mustafa Kamal was also present.

The FBCCI president suggested that a 5 per cent grant be provided to large scale industries and for export-oriented sectors while 50 per cent to the cottage, micro, small and medium enterprises (CMSMEs) and agricultural sector.

So far, the government announced Tk 30,000 crore in stimulus for large-scale industries, Tk 20,000 crore for CMSMEs, Tk 10,500 crore for export-oriented sectors and Tk 5,000 crore for the agricultural sector.

Fahim also recommended that the tax authority reduce value added tax (VAT) and advance income tax (AIT) in certain sectors.

He also suggested that the government opt not to go for more lockdowns.

Instead, he demanded strengthening health safety management so that no physical, mental and economic pressure is imposed on the people during such hard times.

"Because lockdowns are not sustainable," he said.

The FBCCI also urged that the government to provide one per cent as an incentive to banks which succeeded in disbursing their respective portions of the funds on time.

Fahim said the budget needs to be formulated to address the challenges accrued due to Bangladesh's upcoming United Nations status graduation from a least developed country to a developing country.

In this connection, the FBCCI demanded withdrawal of the AIT from all kinds of businesses for the next two years.

The apex trade body also demanded reduction of corporate tax by 2.5 percentage points from the present 32.5 per cent. It also appealed for a further reduction of tax for listed companies from last year's rate of 25 per cent.

He also suggested that the government ease access to finance for companies and traders and check hidden charges imposed by banks on businesspeople.

Rupali Chowdhury, president of the Foreign Investors' Chamber of Commerce and Industry, demanded continuation of financial supports for the CMSMEs through the creation of a smart database of such firms.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, demanded increasing cash incentives for non-traditional markets to 5 per cent from 4 per cent and reducing tax at source to 0.25 per cent.

He also urged doing away with the submission of tax returns and VAT on all kinds of materials used for exports.

He also demanded a 10 per cent incentive on export of garment items made of non-cotton fibres mainly to encourage local garment exporters to using manmade fibres as the demand for garments from such fibres is soaring worldwide.

Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association, sought fixing VAT at Tk 3 per kilogramme on sales of all kinds of yarn for narrowing the discrepancy between manmade fibres and cotton yarn.

Currently, the government takes Tk 6 per kg as VAT on the sale of manmade fibres but Tk 3 per kg for cotton yarn.

He also suggested treating exporters equally when giving out cash incentives.

Md Jashim Uddin, president of the Bangladesh Plastic Goods Manufacturers and Exporters Association, said the revenue collection growth should be 20 per cent instead of the 35 per cent targeted every year because usually 10 per cent to 15 per cent was achieved.

Shafiul Islam Mohiuddin, former FBCCI president, said the VAT on manmade fibre sales should be zero per cent and at the same time the government's policy continuation was very important.

While chairing the discussion, NBR Chairman Abu Hena Md Rahmatul Muneem said the next budget would be formulated targeting to save local industries, trade facilitation and expansion of the tax net.

However, tax dodging through the fabrication of multiple audit reports by a section of companies might become impossible because the auditing system was being automated, he said.

A trade-off is necessary in some cases in the next budget because of Covid-19, said Finance Minister Kamal.

It is very difficult to reach a balance between revenue collection and reducing the taxes from different sectors, he said.