Metropolitan Chamber of Commerce and Industry (MCCI) has placed a set of proposals for fiscal 2009-10 budget asking for trade and industry friendly fiscal measures to assist the productive sectors survive the current crisis.
"Though the country is fortunate not to have been seriously affected economically, however, it remains exposed to the possible slow-down in exports, especially ready-made garments, leather and footwear, frozen foods and also a likely down-turn in wage earners' remittances," said MCCI president Abdul Hafiz Choudhury during a meeting with Abdul Mazid, Chairman of the National Board of Revenue, Wednesday.
Abdul Hafiz Choudhury handed over the budget proposals to the NBR chairman during the meeting.
NBR chairman Abdul Mazid said the government would formulate the next budget considering the impact of global recession.
"This year is very critical year for our economy, and we want to give a simplified and business-friendly tax policy," he said.
The budget will be the first by an elected government after two years, and its manifesto will be reflected in the budget, he added.
"A budget is a document of expenditure and income. The expenditure is administered by the government officials, but the revenue comes from the private sector," he said.
The government is well aware of the income issue and it would formulate such a tax policy that would help the people pay the tax, he added.
"The taxpayers must have a clear idea about why they are paying taxes," the NBR chairman emphasised.
In his speech, MCCI President Abdul Hafiz Choudhury said the current year is marked by what is popularly called economic emergency. Whether one agrees to the existence of the economic emergency or not, the fact remains that the economy is faced with serious challenges and the MCCI strongly feels that the government's budget has a major role to provide policy support to the productive sectors, he added.
He said the government has assumed office at a time when the world economy is in a deep recession. Though the country is fortunate not to have been seriously affected economically, however, it remains exposed to the possible slow-down in exports, especially ready-made garments, leather and footwear, frozen foods and also a likely down-turn in wage earners' remittances, said Mr Hafiz.
It is essential not only to remain vigilant against any fall-out impact of the global crisis but also to adopt strong stimulus measures to help boost economic activities, the MCCI president said adding that for this, in our view, two most important components of any stimulus package are: (i) supportive fiscal policy and (ii) a conducive tariff regime.
In the backdrop of the prevailing economic situation, the MCCI urged the government to provide a comprehensive package of fiscal measures that will extend support to real sector production, raise sufficient revenue to meet its growing expenditures, hold the budget deficit in check, contain the inflationary pressures and enhance budgetary spending on infrastructure, education, health and social services, which will boost the country's growth potentials, create employment opportunities and accelerate poverty reduction.
For the fiscal concessions, the MCCI's recommendations include (1) The corporate tax rate for non-listed companies should be reduced to 35 per cent in view of the low probability this year of the country's corporate sectors.
(2) Income tax for banks, insurance companies and other financial institutions which were raised to 45 per cent in 2003, is unfair. MCCI feels that there is no justification for treating financial institutions differently. There is no such differential treatment in other countries in the sub-region.
(3) The Tax Holiday Scheme should be continued and also more members of potential sectors to be incorporated.
(4) Tax on dividend should be reduced to 10 per cent. The tax paid on dividend should be treated as final settlement of tax.
(5) The exemption limit for individual taxpayers, which is now Tk. 1,65,000/-, should be raised to Tk. 2,00,000/- in view of the spiralling costs of living.
(6) The National Board of Revenue should formulate specific guidelines for CRF issued by the PSI agent.
(7) For greater development of the industrial sector, flow of technical know-how and technical assistance are indispensable. However, the situation has been vitiated by limiting royalty and technical fee to 5 per cent of profit. Linking technical fee with profit is not only impracticable, it also contradicts the Foreign Exchange Regulations Act and the Board of Investment guidelines, which link technical fee with sales. Accordingly, to help flow technical know-how and technical assistance, the fee should be linked to sales and the rate should be 6 per cent as provided in the Foreign Exchange Regulations Act and the investment guidelines of the BOI.
(8) We maintain that discretionary powers for the tax officials militate against revenue collection and also cause harassments to the tax-payers. Accordingly, we feel that all such discretionary powers need to be withdrawn.
(9) Due to inadequate cold storage facility for essential life saving drugs, pharmaceuticals, animals at airports, importers /exporters are facing problems to arrange right time shipment schedule. We suggest enhancement of cold storage facility at the airport.
(10) Supplementary duty on raw materials and components should be eased as a matter of principle so that local industries may be competitive.
(11) The confusion with regard to completely built-up (CBU) and completely knocked down (CKD) should be removed so that the government's -revenue does not suffer and at the same time, the local assembling industry can grow.
