Budget execution hinges on socio-political stability: FICCI

Terming the GDP growth target of 7.3 per cent ambitious, the Foreign Investors' Chamber of Commerce & Industry (FICCI) on Friday expressed its concern about some proposals in the budget including introduction of SIM replacement tax, and imposition of the highest slab of tax for individuals.
"The proposed budget of TYK 2.5 trillion, which is 12.59 per cent higher than that of last fiscal year is somewhat challenging but it is achievable subject to a stable socio-political situation," the FICCI said in a reaction to the proposed national budget for the fiscal year (FY) 2014-15.
The FICCI said achieving the GDP (Gross Domestic Product) growth target will require an increase in GDP-investment ratio from 29 to 34 per cent.  
In the reaction, the chamber appreciated some proposals of the budget and put some recommendations.
About the slab of tax, the FICCI said this highest rate of tax, coupled with surcharge, will, in effect, enhance the effective tax rate between 33 and 35 per cent for an assessee who maintains transparency.
The FICCI said enhancement of the rate of customs duty from 2 to 25 per cent in case of some accessories relating to transformer, busbar trucking system, electrical panels etc. used by electrical/electronic manufacturers will increase the cost of production.
The truncated VAT (Value Added Tax) rate for transport service providers needs to be enhanced from 4.5 to 7.5 per cent," the chamber said.
The FICCI said change of the base for the computation of head office expenses and incentive bonus as mentioned in Sections 30(g) & 300) of ITO, 1984 will result in notable reduction of the admissible expense allowances under relevant heads.
The chamber appreciated the following proposals of the budget-- reduction of the rate of minimum tax from 0.50 to 0.30 per cent, extension of tax holiday benefit for designated industries from 2015 to 2019, reduction in the rate of tax collection from the dealers and distributors from 5 to 3 per cent, recognition of BAS (Business Activity Statement) and BFRS (Bangladesh Financial Reporting Standards) in the tax legislation, reduction in the rate of corporate tax for unlisted companies from 37.5 to 35 per cent, withdrawal of VAT from rented warehouse, reduction in the rate of custom duties leviable on a large number of raw materials used by the pharmaceutical industry and imposition of surcharge on industries which cause pollution to environment.
The FICCI gave 5-point recommendation for consideration before finalisation of the proposed budget.
These are rationalisation of deduction of VAT at source and simplification of the procedure of price declaration, withdrawal of supplementary duty on locally manufactured products, particularly locally manufactured paints, withdrawal of the provision regarding inadmissibility of royalty and technical know-how fees, withdrawal of surcharge on income tax of assessees having a net worth of Tk 20 million and reduction of customs duty on raw materials from 5 to 2.5 per cent and complete withdrawal of duty on machinery equipment.