Revenue earning is a major challenge: MCCI

The Metropolitan Chamber of Commerce and Industry (MCCI) sees requisite revenue earning to finance the proposed big budget as a major challenge for the government against the backdrop of current target failure.
"Since the government could not achieve the revenue target set for the current fiscal year, MCCI feels that attaining the increased revenue target in FY 2015-16 will be a major challenge," the chamber said Friday in its reaction over proposed budget, worth some Tk 2.95 trillion.
However, the elite trade body hailed Finance Minister AMA Muhith for recognising the challenges the economy faced and for proposing a wide range of fiscal measures in
the budget to boost economic growth, reduce poverty, provide protection to local industries, create employment opportunities, and widen the safety nets to improve economic condition of people.
The chamber, in a statement signed by its president Syed Nasim Manzur, also welcomed the government proposal for reducing the corporate tax rates in some cases, which 'has been a longstanding demand of the private sector'.
The chamber hailed providing transport and communications sector highest priority in the ADP (annual development programme), with an allocation of Tk 216.59 billion or 22.3 per cent of the total ADP outlay.
It noted that the second-highest allocation of Tk 184.79 billion or 19.05 per cent of the ADP outlay went to the power and energy sector.
"The chamber agrees that exploration of gas must be prioritised as many industries are currently unable to operate for lack of gas. Steps must be taken to diversify fuel usage for power generation and to improve energy security."
The MCCI suggested that savings from lower petroleum prices should immediately be passed on to consumers at all levels.
It finds allocation to education and health sectors, 12.3 per cent and 5.4 per cent of total ADP outlay respectively, as very low relative to the country's need and also compared to public-sector allocation in neighbouring countries.
"The Chamber would recommend that in making the social-sector allocations, highest priority is given to primary and secondary education, as well as primary healthcare services."
About the targeted GDP growth of 7.0 per cent the chamber said the growth target must be set higher in order to achieve the status of a middle-income country by 2021.
"This cannot be achieved without higher private-sector investment which needs to be encouraged by providing specific fiscal measures."
The chamber felt that all sectors of the economy should be progressively brought under the tax net. However, it requested recognising the state of specific sectors and their ability to pay.
It noted that readymade garment, textiles and other export sectors in Bangladesh are currently facing the twin challenges of the Eurozone crisis and the increased costs of compliance.
"Therefore, the increase in tax at source to 1.0 per cent from 0.3 per cent should be reconsidered until the industries are on a stronger footing. In the interests of export diversification non-RMG export sectors should be provided with at least the same if not better incentives for growth," it said.
The MCCI urged the government to limit its borrowing from the banking system within the target set in the budget. It also requested the government to continue its efforts to explore alternative sources of finance, including PPP (public-private partnership).
The chamber shares the government's frustrations caused by donor-induced delays in release of funds.  It urges the donors to ensure faster and more efficient release of pipeline funds as well as make new commitments for the upcoming fiscal.
Welcoming the government decision to increase the salary of government employees with effect from 1 July 2015 the MCCI expected that this will result in commensurate improvements in efficiency and service quality.
It hailed the government for raising individual's taxable income threshold to Tk 250,000 from Tk 220,000.
The chamber, however, was critical on raising VAT (value added tax) from 2 per cent to 4 per cent on superstores which 'would be economically damaging to this emerging but struggling industry with high employment potential'.
It opposed the idea of imposing VAT on tuition fees at any level in order to make quality education affordable for the wider population.
The MCCI found government's move to impose income tax on gratuity to be ill-advised as superannuation funds like gratuity are designed to provide financial security for retired persons. "MCCI strongly feels that government should repeal this proposal."
 syful-islam@outlook.com