We laud the government for introducing a series of tax benefits for local industries, corporate houses and export-oriented sectors in the proposed national budget for fiscal year 2021-22. Lowering of tax to various degrees for local businesses is the strongest part of the proposed budget, which makes it clear that the government is on the right track to overcome Covid-induced economic hardship through job creation by boosting industries.
For example, tax reduction on locally manufactured or assembled computers and other accessories, house and home kitchen appliances like blender, rice cooker, electric kettle etc., power tiller, combined harvester, stainless steel and poultry feed ingredients is a timely move. So are the initiatives like Tax cut for IT service providers, hardware manufacturer; and 10-year tax exemption for mega industries and production of import-substitute industrial goods in the country to establish ‘Made in Bangladesh’ brand. At the same time imposition of higher tax on imported cell phone and some other matrials that can be manufactured locally is a well-thought-out decision. It will certainly give a big boost to local industries which in turn will create jobs and contribute to GDP growth.
But all those tax facilities in the proposed budget will mainly go to medium to large industries. That means small investors find little to cheer up in this budget. Moreover, increasing of tax on mobile financial service (MFS) providers will further frustrate small investors because it is likely to increase the cost of cashless transaction. However, the Financce Miniser proposed keeping small businesses run by women outside of taxation for up to yearly turnover of Tk 7,000,000, which is praiseworthy. But we think the tax on private universities needs to be reconsidered because a majority of these institutions are striving for survival due to prolonged closure for the pandemic.
Overall, the government’s commitment to promote ‘Made in Bangladesh’ brand to reduce dependence on imports can be a game changer for Bangladesh. Manufecturing of house and home kitchen appliances has boomed in Bangladesh since the government introduced tax benefit in this sector in 2010. As a result, today locally manufecturned kitchen appliances have taken up 90 per cent of the local market and are also being exported. Now the government is aiming to usher in similar growth in manufacturing of some other goods like cellphone, computer, laptop, ICT goods, motor-cycle, three/four wheelers etc. which not only deserves appreciation but also all out civic cooperation.