MCCI proposes 3-tier import duty structure

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FE Report
The Metropolitan Chamber of Commerce and Industry (MCCI) Tuesday proposed a three-tier import duty structure in place of the existing four-tier slabs to help local industries become competitive.
The proposal came at the meeting between leaders of the chamber and Finance Minister Abul Mal Abdul Muhith at the latter's his ERD office.
In the current fiscal 2009-10, import duty structure comprised 3.0 per cent on capital machinery and parts, 5.0 per cent on basic industrial raw materials, 12 per cent on intermediate raw materials and 25 per cent on finished products.
The MCCI, in its budget proposal, urged the government to restructure the import duty slabs and make it a three-tier framework of basic raw materials, intermediate raw materials and semi finished and finished products.
It also proposed to reduce duties on basic raw materials to 2.5 per cent and intermediate raw materials to 7.5 per cent.
"The tariff rates on basic raw materials and intermediate products ought to be reduced to help competitiveness of our industries. The budget for 2010-11 has the major task of stimulating the economy after a slight downturn in the current fiscal year," the chamber said.
It said there still exists some uncertainties and stalemate particularly in the investment scenario largely due to the energy and gas shortages.
"There are some downside risks, which must be addressed if the country is to achieve the targeted GDP growth of 6.0 per cent or more in the current fiscal."
The proposal said the corporate tax rate for non-listed companies should be reduced to 32.5 per cent from the current 42.5 per cent and the income tax rate for banks, non-bank financial institutions and insurance companies should be set at par with other companies.
The tax holiday scheme should be continued for another five years, MCCI said in its 12-point budget proposal.
The chamber said the VAT laws should be consolidated and simplified to enable more efficient implementation of the laws resulting in less harassment of taxpayers, lower cost of compliance, and more efficient revenue collection.
"Certain policy issues should be addressed like withdrawal of the discretionary powers given to the taxation authorities, as these are often misused much to the harassment of tax-payers," it said.
Discriminatory provisions regarding deduction of tax at source and credit thereof, treatment of the withheld tax as final settlement of the tax liability and deduction of tax at source in 'contract manufacturing' should be streamlined, the chamber said.
The chamber budget proposal said the price declaration process required under the VAT Act and Rules poses a number of problems, making uncertain and delaying the process of product pricing and thereby increasing the cost of products.
In response to the MCCI proposal, the finance minister said the government would consider the suggestions they have raised and look into the possibility of pursuing a policy of installing captive power plants.
On tax holidays, Mr Muhith said the government might consider continuation of the tax holiday scheme for another five years.
The other issues raised by the MCCI included a provision for extra depreciation allowance for factories working in double or triple shifts, the allowable limit for payment of royalties, revising the technical service fee and withdrawal of the 15 per cent VAT on commercial leasees.
BSS adds: Briefing reporters, Finance Minister A.M.A. Muhith said Tuesday budgetary implementation during the current fiscal year (FY) has been 'the best' in the history of Bangladesh.
"I am confident about achieving 6.0 per cent growth target during the current fiscal," he said, adding implementation of both development and non-development budget during the first six months of fiscal 2009-2010, was noteworthy.
All the indicators of the country's economy are strong and positive, investment is on the rise and domestic demand has gone up by 25 percent, he said.
The finance minister said the government would restructure the stock exchanges for bringing about dynamism in the capital market.
Mentioning the current volatile situation in the country's capital market, he said some people are now controlling the capital market, but the market has to be brought under control of the regulatory body.
The minister said for restoring sanity in the stock market, changes of policies would continue. The capital market should be demutalised and trading, brokerage and investment operations should be separated, he added.
He said the guidelines about public private partnership (PPP) projects would be finalized soon, adding that there is no alternative to implementing projects through PPP.
The MCCI leaders also sought the government's permission to invest in Vietnam and the north-eastern states of India.
In this regard, the Finance Minister said the policy about where Bangladeshis can invest is yet to be formulated and until, then such cases may be dealt with, on a case-to-case basis.