Tax holiday system should go: Muhith

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FE Report
Finance minister AMA Muhith said Thursday tax holiday system should be abolished to bring accountability in the business.
"Instead of tax holiday, low rate tax can be imposed for a longer period," he said at a meeting with the leaders of Metropolitan Chamber of Commerce and Industry (MCCI) in the city.
The government will continue to extend the benefits granted earlier to different businesses for a time being, but it will be discontinued in the future, he added.
About the undisclosed money, he said if it is offered in the budget for the new fiscal year, it will be tied to investment in some particular sectors.
"Undisclosed money can be invested in sectors like readymade garments, information technology and housing," he said.
A negligible amount of money was collected from the previous offers for whitening the undisclosed money, excepting the response generated under the 'emergency period'.
"It was first offered in 1975-76 period. It still continues, but the amount is not significant at all," Mr Muhith said.
About the size of the budget, he said it will be much more than Tk 1.0 trillion, and public-private partnership (PPP) will get a significant allocation.
"The upcoming budget will be the first by the government after coming to power, and there will be a reflection of manifesto in it," he added.
The minister said the government must face the situation against the backdrop of recession.
The main problem is that the budget always draws critical views and opinion of the opposition political parties, which often go violent on the issue, he said.
"We have to reduce the difference and parliament is the effective place where it can be sorted out," he hoped.
The next fiscal year will be crucial as the economic growth may face downturn over the first six months and come down 5.0 per cent level, the minister said.
"It can be hoped that the growth rate will be 6.0 per cent this fiscal year," he said.
Mr Muhith said energy is the 'Achilles' heel'. Generation of 5,000 megawatt of electricity by the third year of the government might not be achievable.
"By the end of the government tenure it is expected that 7,500 megawatt of power can be produced," he said.
The government will allow building of dual-fuel and coal-based power plants in future, he added.
"The budget will include power guideline for the next five years, but the comprehensive planning will be done by the energy ministry and declared later," the minister said.
The government will not privatise any government owned enterprise in the next fiscal, when the country might see lot of volatility, he said.
The government is not changing the list of SOEs identified for offloading shares in the capital market, he added.
"It will start moving as per the list after solving the problem over releasing the shares of Grameen Phone first," Mr Muhith said.
About the draft industrial policy, the minister said he has not yet seen it.
Mr Muhith said he does not support the idea of allowing investment abroad from the next fiscal year due to the global recession, but the government might consider proposals from the following year.
MCCI president Abdul Hafiz Choudhury sought fiscal monetary and tariff policy supports to tide over the multidimensional crisis and urged the government to contain its non-productive expenditure and give priority to rural economy and manufacturing sector.

He pointed out that national savings scheme (NSS) offers 12 per cent interest rate, whereas banks offer maximum 10 per cent interest rate on deposit.
"With such high interest rates for the NSS instrument, the commercial banks are facing difficulties in mobilising deposit," he said.
Former MCCI president Latifur Rahman said the government should allow Bangladeshi companies to invest abroad to expand export market.
Square group chairman Samson H Chowdhury said the National Board of Revenue harasses business houses and sought remedy from the finance minister.
MCCI executive committee member Nihad Kabir said value added tax (VAT) procedure should be simplified.
Mutual Trust Bank managing director Anis A Khan said the government should take measures to address traffic congestion.