Economists have called for formulating the next fiscal’s national budget aligning with the local and global realities to offset external shocks.
They shared their views at a pre-budget discussion held at the National Board of Revenue (NBR) office in the capital on Tuesday.
“What the Trump administration has started will cause turmoil in the global economy. This year’s budget should be formulated considering not only Bangladesh but also the reality of the global economy,” said Prof Mahbub Ullah, president of the Bangladesh Economic Association.
Local economists think that Bangladesh’s duty structure is not global standard and is tailored to give excessive protection to local industries.
“The excessive protection being given to local industries and the way supplementary duty has been increased in Bangladesh is far from the global standards, which has been outlined in the United States Trade Representative’s report. These issues need to be rationalised.” Zaidi Sattar, chairman of the Policy Research Institute, said.
He pointed out that the prices of imported consumer goods in Bangladesh remain significantly higher than global market prices, and the upcoming budget should aim to provide relief to ordinary consumers.
Prof Mahbub Ullah raised the issue that many taxpayers do not receive refunds after paying advance taxes, which he said discourages income tax compliance. “This refund system needs to be simplified,” he said.
Given the mounting inflationary pressure, the economist also proposed raising the tax-free income threshold from the current Tk3.5 lakh to Tk6 lakh in the next fiscal year.
He suggested that the interim government should focus on belt-tightening, calling for allocating funds to complete necessary ongoing projects rather than initiating new mega projects.
Apparel makers seek no hike in corporate tax
At the meeting with the NBR, woven and knitwear garment exporters called for keeping the present corporate taxes unchanged for the export-oriented apparel sector.
Currently, RMG exporters pay 12 percent corporate tax in contrast to 27.5 percent paid by the general sector.
“The price of per unit gas has become Tk40, putting the industry already in risk. This is not the right time to increase corporate tax,” Enamul Haque Khan Bablu, former BGMEA director, told the meeting.
The Bangladesh Textile Mills Association also placed demands, including rationalising the valuation of fabric imports and resolving complications related to HS codes and valuation.
Besides, the SME Foundation proposed allowing quarterly VAT return submissions for SMEs with an annual turnover of up to Tk 5 crore.
It also sought a 10-year tax holiday for leather, leather goods, garment accessories, and backward linkage industries.
NBR chairman warns of misuse of benefits
In reply, NBR Chairman Abdur Rahman Khan said abrupt change in the corporate tax rate will erode the confidence of local and foreign entrepreneurs and go against the spirit of the recently concluded investment summit.
He reiterated the NBR’s commitment to eliminating discriminatory tax practices and reducing exemptions.
“We want to move away from the ad hoc exemptions granted over the years,” he said. “If there is consensus, we’re ready to implement that.”
At the same time, the NBR boss warned that the regulator will work on removing non-tariff barriers and HS code related problems, but exporters or importers found misusing the facilities will have to face punishments
“There will be provisions for exemplary punishment for those who misuse the facilities. There is a lot of misuse going on,” he said.