MCCI for cap on govt's borrowing from banks
Saturday, 13 June 2009
FE Report
The Metropolitan Chamber of Commerce & Industry, Dhaka (MCCI) has termed the proposed national budget for next fiscal as a "bold and challenging" one but it criticised the opportunity offered to whiten the undisclosed money for three years.
"The MCCI is disappointed that the Budget allows whitening of undisclosed income and that too for three years," it said in a written statement Friday.
"Such a provision will discourage tax-payers from paying taxes knowing that they can pay only 10 per cent in the three years in full and final payment for whitening undisclosed income," the leading trade-body said.
In a written statement, MCCI said it had made it a point on every available occasion in the past that whitening of undisclosed income would have multiplier adverse impact in the long term on the people's attitude to paying tax.
The chamber feels that the concession, if allowed, must be limited to income from legal sources and their investments restricted to productive sectors only.
About the challenge of the proposed budget for FY2010, the MCCI said: Financing and implementation will be the two major challenges."
It said the budget's net outlay is Tk.1.13 trillion, which is due to be financed by 56.2 per cent from tax revenue, 13.6 per cent from non-tax revenue, 12.1 per cent from foreign loans and grants, leaving the gap to be met from domestic sources, of which borrowings from the banking system would be the main component.
This projected borrowing will be significantly higher compared to the previous year's budget, the statement said adding, "in 2006-07, the government's borrowings from the banking sector was Tk 44.20 billion, in 2007-08 was Tk 109.60 billion and in 2008-09 was Tk. 106.98 billion."
"We strongly feel that there must be a cap on the government's borrowings from the banking sector, and instead, it should seek a fair share of the financial package due to be made available to the developing countries in pursuance of the decision taken at the G 20 Summit recently," the MCCI said.
The leading chamber said this budget which has been framed in the backdrop of the global economic recession, attempts at stimulating local demand, providing appropriate protection to domestic industries and delivering a wide range of social safety measures.
The generous allocations made for education & IT, health, local government, human resource development, agriculture and rural economy and social safety nets are commendable, the MCCI lauded.
"MCCI strongly feels that such investments in physical and social infrastructures will help improve the quality of people's life, develop human resources and create better employment opportunities."
Hailing the new paradigm of investment--Public Private Partnership (PPP), the trade-body said the special allocation of Tk25.00 billion for the PPP fund would help improve the much needed quality of infrastructures.
The Chamber wants issuance of guidelines for the private sector to obtain financing and participating in the PPP projects. "Ideally, such funds should be raised from the capital market but the reality is that response for 'Greenfield' projects is uncertain and varies from project to project."
MCCI welcomed the initiatives taken for automation of government administration thereby improving efficiency, transparency and service delivery.
But the chamber was critical of the government's imbalanced tax provision, saying, "The chamber is disappointed that the income tax rate for banks, financial institutions and insurance companies continues to be discriminatory."
It demanded that their tax rate should be reduced gradually.
The chamber terming Tk42.78 billion allocation for energy and power sectors inadequate said: It does not address the critical power needs of the country."
Welcoming the proposed Tk50.00 billion stimulus package for the recession-hit sectors, it said, "there is every likelihood that the economy will be hit by the 'second wave' (through impact on credit) and the 'third' wave (through impact on the consumer economy) of the international recession."
"The allocation should be increased and also cover sectors such as the RMG and textile sectors," its written statement said.
The MCCI reiterates that better delivery of public services, be it education, health, etc is a complex and difficult task.
"It welcomes the idea of utilising the local government bodies. In future, non-governmental organizations (NGOs) can also be involved as front-line service providers," the trade body said in its statement.
The Metropolitan Chamber of Commerce & Industry, Dhaka (MCCI) has termed the proposed national budget for next fiscal as a "bold and challenging" one but it criticised the opportunity offered to whiten the undisclosed money for three years.
"The MCCI is disappointed that the Budget allows whitening of undisclosed income and that too for three years," it said in a written statement Friday.
"Such a provision will discourage tax-payers from paying taxes knowing that they can pay only 10 per cent in the three years in full and final payment for whitening undisclosed income," the leading trade-body said.
In a written statement, MCCI said it had made it a point on every available occasion in the past that whitening of undisclosed income would have multiplier adverse impact in the long term on the people's attitude to paying tax.
The chamber feels that the concession, if allowed, must be limited to income from legal sources and their investments restricted to productive sectors only.
About the challenge of the proposed budget for FY2010, the MCCI said: Financing and implementation will be the two major challenges."
It said the budget's net outlay is Tk.1.13 trillion, which is due to be financed by 56.2 per cent from tax revenue, 13.6 per cent from non-tax revenue, 12.1 per cent from foreign loans and grants, leaving the gap to be met from domestic sources, of which borrowings from the banking system would be the main component.
This projected borrowing will be significantly higher compared to the previous year's budget, the statement said adding, "in 2006-07, the government's borrowings from the banking sector was Tk 44.20 billion, in 2007-08 was Tk 109.60 billion and in 2008-09 was Tk. 106.98 billion."
"We strongly feel that there must be a cap on the government's borrowings from the banking sector, and instead, it should seek a fair share of the financial package due to be made available to the developing countries in pursuance of the decision taken at the G 20 Summit recently," the MCCI said.
The leading chamber said this budget which has been framed in the backdrop of the global economic recession, attempts at stimulating local demand, providing appropriate protection to domestic industries and delivering a wide range of social safety measures.
The generous allocations made for education & IT, health, local government, human resource development, agriculture and rural economy and social safety nets are commendable, the MCCI lauded.
"MCCI strongly feels that such investments in physical and social infrastructures will help improve the quality of people's life, develop human resources and create better employment opportunities."
Hailing the new paradigm of investment--Public Private Partnership (PPP), the trade-body said the special allocation of Tk25.00 billion for the PPP fund would help improve the much needed quality of infrastructures.
The Chamber wants issuance of guidelines for the private sector to obtain financing and participating in the PPP projects. "Ideally, such funds should be raised from the capital market but the reality is that response for 'Greenfield' projects is uncertain and varies from project to project."
MCCI welcomed the initiatives taken for automation of government administration thereby improving efficiency, transparency and service delivery.
But the chamber was critical of the government's imbalanced tax provision, saying, "The chamber is disappointed that the income tax rate for banks, financial institutions and insurance companies continues to be discriminatory."
It demanded that their tax rate should be reduced gradually.
The chamber terming Tk42.78 billion allocation for energy and power sectors inadequate said: It does not address the critical power needs of the country."
Welcoming the proposed Tk50.00 billion stimulus package for the recession-hit sectors, it said, "there is every likelihood that the economy will be hit by the 'second wave' (through impact on credit) and the 'third' wave (through impact on the consumer economy) of the international recession."
"The allocation should be increased and also cover sectors such as the RMG and textile sectors," its written statement said.
The MCCI reiterates that better delivery of public services, be it education, health, etc is a complex and difficult task.
"It welcomes the idea of utilising the local government bodies. In future, non-governmental organizations (NGOs) can also be involved as front-line service providers," the trade body said in its statement.