Reforms in tax policies, encouraging investment and raising revenue collection should get priority in preparing the next fiscal’s budget, economists and business leaders said on Saturday.
The recommendations came at a webinar on National Budget 2021-22, styled: 'Policy Recommendation' oraganised by International Business Forum of Bangladesh (IBFB).President of IBFB Humayun Rashid made the opening remarks while Former Chairman of NBR Dr Muhammad Abdul Mazid presented the keynote paper.
Former Governor of Bangladesh Bank Dr Atiqur Rahman, Distinguished Fellow of Centre for Policy Dialogue (CPD) Dr Debapriya Bhattachrya, Bangladesh Institute of Development Studies (BIDS) Director General Dr Khan Ahmed Sayeed, Legal Economist and Vice President of IBFB MS Siddiqui and Chairman of BSRM group of companies Alihussain Akberali, spoke as the panel discussants.
Dr Atiqur Rahman said that the upcoming budget should focus on SME, social safety net programme, agriculture and small medium enterprises (SMEs) because these are crucial sectors playing significant role in the country,
It is important to ease policies for digital businesses or ecommerce as Tk 10 billion worth of business takes place through e-commerce business, he added.
Speakers said that government may impose a condition for public sector banks to extend loan to SMEs to qualify for the budgetary support.
They also shared that both domestic and foreign investors ranked the taxation system and administration as one of the major roadblocks towards increasing investment in Bangladesh.The honest tax payers are being repeatedly taxed, while the tax-evaders are being incentivized. Revenue strategy must move away from sales-based tax system to profit or income-based income tax, they added.
The deductions at source and advance tax need to be rationalised; as a result, the final incidence of such a tax cannot be more than what the assessed tax on profits would be.
The budget may encourage document-based transactions of business and purchase of moveable and immovable properties.
All payments should be through banking system with a threshold for micro and small businesses.
Cent percent compliant business and individual will get a tax rebate and non-compliant taxpayers will pay higher rate of tax.
Some major transactions such as purchase of real estate is fully on cash basis. The assessment of tax on fixed tariff and there is not link with actual transaction.
Such cash transactions are should be allowed only through banking channel so that the NBR can ascertain source of money and payment of actual tax on income of those transacted money.
Speakers also shared that business become efficient competing with local and overseas manufacturers so that our businesses become competitive in the international market.
On the other hand, NBR unable to give bond facilities to all possible export oriented industries except RMG, Leather and few Ship builders.
NBR reportedly has shortage of work force. NBR is busy with a huge job of maintaining the bond with its inefficient and corrupt officials.
The policy makers trying their best to divert export products but forgot about bottleneck in NBR. The budget may reduce this customs duty to zero but impose VAT of 15 percent and withdraw bond facilities. Such a reform in customs duty will eliminate corruption and facilitate few hundred products to be competitive like RGM in the global market.
NBR should undertake take a number of potential reform measures, including the segmentation of taxpayers, forming semi-autonomous revenue authorities, formation of a tax ombudsman and ensuring private sector representation in non-executive revenue governance bodies etc, said the speakers.
Our budget encourages investment in such companies in the name of black money whitening scheme.
The facility should be allowed only after paying regular tax as well as some additional penalty.
NBR should establish data bank, collection third party information for efficient revenue forecast.
Reliance should be increased on Information Technology – big data, real time analytics, mobile apps, social media, etc.