Budget for 2021-22 fiscal year has tried to strike balance between lives and livelihood, says Dhaka Chamber of Commerce and Industry
The Dhaka Chamber of Commerce and Industry (DCCI) has said the country needs to control Covid-19 transmissions and ensure vaccination for all if the government wants to achieve the targeted 7.2% GDP in the proposed budget.
“The proposed budget is by and large inclusive and pro-people,” said DCCI President Rizwan Rahman thanking the government for reducing corporate tax both for listed and non-listed companies.
He said it will help boost investment, but suggested reducing it at a progressive rate of 2.5% in 2022-23 and 2023-24 fiscal years.
In its initial reaction, the chamber body president said the budget is a big one with an aim to economic recovery and effort to strike a balance between lives and livelihood.
The proposed budget for the 2021-22 fiscal was announced on Thursday with a GDP target of 7.2% and inflation of 5.3%.
This year’s budget is 12.43% bigger than the revised budget of the last fiscal. In order to achieve the targeted GDP, all aspects of the economy have to perform better, which is challenging given the worldwide economic scenario, said the DCCI.
The budget tried to strike a balance between lives and livelihood, it said but the government may rethink the revenue target as it would be a great challenge to implement such a big budget considering the overall Covid-19 situation.
The DCCI said the government has given importance to most of the proposals of the DCCI especially increasing time limit for income tax and VAT return, reducing corporate tax and other taxes, engaging government owned schedule banks in SME financing, reducing advance tax on import of raw materials, increasing expenditure in the health sector and more allocation in the social safety net aiming for employment generation.
In the proposed budget, mitigating revenue shortfall, financing and ADP implementation are the biggest challenges, it said.
Since the proposed budget is an expensive one, it is more or less reflecting an inclusive approach through its indication to increase investment, fiscal incentives to the businesses, increased allocation in the health and social safety net programs and focus on economic recovery, said the DCCI.
In some cases, the proposed budget slashes tax rate which may fuel investment, said the DCCI president.
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The proposed budget allocated an increased amount for health and social safety net measures, which is a good initiative but needs to implement ADP in the health sector, he said.
The DCCI president urged to widen the tax net, collection of due taxes, tax collection at the district level and tax automation for more revenue collection.
Mandatory e-TIN for national savings, cooperatives and postal savings will increase tax, said the DCCI.
The proposed budget deficit is 6.2% of GDP which is acceptable, Rizwan said.
New industries like home appliances, light engineering, automobile, ICT got tax exemptions, which is good for industrialization, he said.
The DCCI also recommended creating a strong capital and bond market for long-term financing.
Tax exemptions have been given to the private sector to invest in hospitals and clinics for 10 years, he said, hailing the decision.
The DCCI chief said the automobile industry, especially for 3- and 4-wheelers, will get a boost as for local manufacturers, they will get 20 years’ tax benefits.
He also requested to rationalize advance income tax on export-oriented RMG, jute and jute goods, agro-processing and API raw materials.