There is unlikely to be any surprise fiscal measure in the budget for fiscal 2018-19 as the impending general election at the end of the year weighs heavily on the ruling party's mind.
Instead, the government is aiming to fine-tune the existing fiscal measures, said Finance Minister AMA Muhith yesterday.
“This is election year. New initiatives cannot be taken during the election year. So our main objective is to make the past initiatives perfect,” he said at a congregation of several hundreds business people at the capital's Pan Pacific Sonargaon hotel.
The National Board of Revenue and the Federation of Bangladesh Chambers of Commerce and Industry jointly organised the event to hear out the businesses' opinions before framing the fiscal measures for the incoming year.
Businesses at the event complained of harassment by taxmen and at customs bond commissionerate.
They also called for bringing down bank interest rates on loans to single digit, cash incentives for export on export value, favourable tax for cottage industries as well as small bread and biscuit makers, measures to curb soaring prices of construction materials such as rod and cement.
The FBCCI demanded a raise in tax-free income ceiling for individuals and 2.5 percentage point cut in corporate tax rates.
It also wanted the government to take measures to reduce the cost of doing business, improve infrastructure and port capacities, and transportation costs.
The apex trade body also suggested resisting the urges of framing an ambitious budget ahead of the election as it can negatively affect the economy.
“We think, it is necessary to determine the budgetary outlay in consultation with all based on implementation capacity,” said FBCCI President Shafiul Islam Mohiuddin.
Big budget and high revenue collection target put pressure on businesses and heightens the harassment of businesses, the FBCCI said. The extent of harassment faced by taxpayers now in contrast to 10 years ago has reduced, Muhith said.
“The NBR has come closer to people. This is a good sign,” he said, adding that its reflection can be seen in the spike in the number of registered taxpayers and returns submission.
He said his ministry plans to bring in changes in income tax rules but this would be done and made public after consultation with the prime minister.
He also said he would work on finding a way to give incentives to exporters based on their export value.
Also, he promised to bring the e-commerce sector under IT enabled services (ITES), which currently enjoy tax benefits.
Referring to the road conditions and the problem of transportation, he said the government has made rule that contractors will have to take responsibility of maintenance for three years to keep roads in top shape.
Besides, the government is also installing weighing machines on some highways to restrict the movement of vehicles with excess loads.
Muhith also said steps would be taken to reduce the tax and VAT burden on the cottage industry of bread and biscuits makers as well as cut import duty for boulders.
The import of boulders involves paying taxes of up to 69 percent, said Alamgir Shamsul Alamin, president of the Real Estate and Housing Association of Bangladesh.
The implementation of the Annual Development Programme would come to a halt if the construction raw materials continue to become dearer, said Mir Nasir Hossain, former president of the FBCCI.
AK Azad, another former president of the FBCCI, demanded single-digit interest rate on bank loans.
He said he had taken a loan at 8-9 percent interest; and one day, out of the blue, he got a letter from the bank informing him that the interest rate on his loan has been hiked 4 percentage points.
Azad said banks collected deposits at 5-6 percent interest rate and the loan was given to him by adding an interest rate spread to the figure. “Then on what logic was the interest rate hiked by 4 percentage points?”
He also demanded a cut in corporate tax rate. Banks had enough liquidity only a few months ago, said Abdus Salam, a former vice-president of the Dhaka Chamber of Commerce and Industry. “Where has all the money gone?”
FBCCI president Mohiuddin demanded strict vigilance by the central bank to bring discipline to the banking sector, steps to stop lending on political consideration and single-digit interest rates.
“The recovery of the banking sector from the present condition is very important for us.”
Discipline in the sector has to be ensured through strict vigilance. Otherwise, investment will be affected, he added.
Small and medium enterprises do not even get loans from banks, said Abu Motaleb of Byabosayee Oikya Forum.
National Board of Revenue Chairman Md Mosharraf Hossain Bhuiyan said his office will work to rationalise the corporate tax rates.
He favoured cut in tax rate in the lower income slab instead of raising the tax-free income ceiling.
He also assured of steps to curtail harassment for businesses at customs bond commissionerate and other offices.