CPD lists key challenges for next budget preparation

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FE Report
Centre for Policy Dialogue (CPD), a leading private think-tank, Saturday listed lower investment, growing shortfall in power and gas supply, and rising inflationary pressures as key challenges as the government prepares for next budget.
"The next budget has to take note of the external challenges too," said Mustafizur Rahman, executive director of the CPD, at a press conference held its office in the city.
Mr Mustafiz, who was speaking on CPD budget proposals, said that the finance minister in his budget should put emphasis on restructuring the Securities and Exchange Commission (SEC) to facilitate long term development of the capital market.
He said capital gains tax could be a potential source for mobilising additional resources, and it should be realised in a manner that it does not add to volatility in the stock market.
Mr Mustafiz said revitalisation of Mongla port is important for economic development of western regions and also in view of renewed effort to improve connectivity with India including allowing the neighbouring country to use the port.
"Direct railway link from Dhaka to Mongla through special projects should be put in place in the budget proposal," he added.
Mr Mustafiz said the government can borrow from non-banking sector to meet budget deficit, which he said should be 5.0 per cent of the GDP.
The government will be in a better position if it uses non-banking window of domestic financing even though it may mean borrowing at higher interest rates, CPD executive director added.
"In view of the need for enhanced borrowing, a review of interest rates on the national saving certificates may need to be deferred this year," he added.
CPD said further rationalisation of duty on raw materials and intermediate goods in the next budget saying the duty on finished goods may remain unchanged at 25 per cent.
The draft PPP policy guidelines will need to be fianalised in a speedy manner, the CPD in its proposals said.
"A committee styled PPICOM has 11 members including one representative from private sector. There should be more representatives from the private sector," Mustafiz added.
He said the PPP concept is now concentrated on development of industrial infrastructure and it should be encouraged in non-industry infrastructure development as well.
CPD in its budget proposal said that the provision of legalising undisclosed income should not be there in the upcoming budget as there is no substantial recovery under the provision.
Mr Mustafiz said 100 per cent export-oriented industries located outside EPZs many be allowed to enjoy selected facilities as those enjoyed by units located in the EPZs.
"In view of acute power and gas crisis in industrial units, the government might withdraw additional tariff for peak hour usage for the SMEs likewise the RMG sector," Mustafiz added.
Mr Mustafiz said higher income tax moblisations is a good sign for the economy saying: "Renewed efforts are required to sustain the growth."
He opined for popularsing online submission of tax returns proposing "in-built calculator" to facilitate self-assessment.
He said that the government may consider supply of diesel and furnace oil for generators at subsidised rate.
"…Procedures to import furnace oil by private sector should be made easier," Mr Mustafiz added.
The budget may allocate resources for establishment of funds and provide special incentives in the form of loan with low interest for large commercial building and hospitals so that they could go for own power generations through solar energy.
The CPD stressed the need for finalisation of the national coal policy and 'Coal Bangla', a separate entity should be established to deal with coal exploration, transmission and management issues.
The government should enforce the use of electronic Cash Registers (ECRs) to enhance VAT collection for all medium and large enterprises located in divisions and district towns.
Mr Mustafiz said 'green tax' may be levied on all polluting industrial units to encourage installation of effluent treatment plants (ETPs).
The CPP said zero tariff on import of essentials food commodities including rice, edible oil and lentils should be continued to tame the inflation.