'Higher tax revenue a must to offset cyclone impact'

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FE Report
The National Board of Revenue (NBR) Chairman Muhammad Abdul Mazid Wednesday underscored the need for gearing up tax revenue collection to overcome adverse effects of the devastating cyclone on the economy.
He stated that because of huge financial loss caused by cyclone Sidr, the fiscal deficit might increase, leading to possible increase in government borrowings from the banking system.
Addressing a meeting with the members of the Metropolitan Chamber of Commerce and Industry (MCCI) in the city, Mazid sought private sector cooperation to cope with the situation, arising out of destruction and devastation caused to the economy by the cyclonic storm.
MCCI President Latifur Rahman delivered his address of welcome on the occasion. President of the International Chamber of Commerce-Bangladesh (ICC-B) Mahbubur Rahman was also present.
The MCCI members raised several critical points relating to income tax, value added tax (VAT) and customs and drew the attention of the NBR for removal of hindrances to businesses.
Addressing the meeting, the NBR chairman said there might be food grain shortfall this year for the unexpected natural calamities.
"Two floods have caused damage to crops in almost 65 per cent of the country's arable land and the cyclone Sidr that just came after the floods -- affected the rest 35 per cent," he lamented.
Economic pressure will ease partially if the board can boost tax revenue collection, he said.
He assured the members of the MCCI that the NBR would seriously consider their proposals made in the meeting.
"We will take immediate steps to resolve some of the problems faced by businesses," Mazid said.
He requested the chamber bodies to keep a special allocation on research and analysis so that the government could prepare fiscal measures on the basis of losses and profits of businesses.
"We will hold a series of meetings and workshops with the leaders of the trade promotion organisations from December to take their suggestions before preparing the budget for the next fiscal," he said.
On continuation of pre-shipment inspection (PSI) system, Mazid said: "We will take decision scrutinising merits and demerits of the PSI system and we have sought written opinions from all stakeholders in this connection."
The contract date of four PSI companies will expire on August 2008.
About on-going reform activities, the NBR chief said a liberal policy will be followed so that business activities are not adversely affected.
The MCCI president said: "Disjointed tariff approach continues to harm the country's fragile industrial base as imports become more profitable than manufacturing."
The members of the chamber noted in the meeting that the budget for current fiscal had hit hard the manufacturing sector due to imposition of increased tariff incidence on raw materials and raising of import duty from zero per cent to 10 per cent on 430 items, mostly raw materials used in local industries.
The government also doubled the tariff rate -- from 5.0 per cent to 10 per cent -- of about 12000 industrial raw materials and machinery, they pointed out.
The MCCI leaders requested the NBR to cut discretionary power of taxmen to ensure taxpayer-friendly environment.
On income tax-related matters, the MCCI urged the board to issue administrative orders on adjustment of refund tax, specify fixed percentage as penalty for default in payment of tax, reconstitution of tribunal benches and refund of credits deducted as tax at source.
The MCCI members also stressed the need for rationalising clean report of findings (CRFs) issued by PSI companies and scrutinising matters of over-pricing and under-pricing before accepting CRFs, continuation of the PSI system and fixing one week term for value determination by the review committee for disposal of disputes to expedite release of products from ports.
The chamber leaders also requested for fixation of six months' time limit for refund of excess duty and implementation of electronic assessment.
On VAT related matters, the MCCI leaders urged for increasing time frame for VAT rebate, extension of time-limit for filing VAT return, simplification of, and expediting, VAT registration procedure and curbing discretionary power of VAT authority.
Responding to the recommendations of the MCCI, income tax policy member Ali Ahmed, VAT member Mohammad Alam and customs administration member Mashror Ahmed assured them of providing all possible help to ensure sustainability of the local industries.