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The budget for the upcoming fiscal year of 2023-24 will not be over-ambitious considering the global economic crisis and instability, said Planning Minister MA Mannan.
“Bangladesh’s economy is quite stable now but there is no scope to become complacent due to ongoing global geo-economic challenges.”
He made the comments at a pre-budget discussion organised by the Bangladesh-Malaysia Chamber of Commerce and Industry (BMCCI) in the capital’s Gulshan club on Saturday, according to a press release of the chamber.
The minister said the Russia-Ukraine war, the global energy price increase, and the interest rate hike by the US Fed have all impacted the economy.
“Bangladesh has no other alternative but to increase the tax net since the country’s tax-to-GDP ratio is not satisfactory and revenue collection is low.”
He said agriculture, leather, light engineering, pharmaceuticals and other important sectors should get the same facilities as the ready-made garment industry.
Mannan emphasised product diversification of exportable items in order to be competitive after Bangladesh becomes a developing nation in 2026 from a least-developed country.
Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh, said the budget would be prepared at a time when there are macroeconomic uncertainties stemming from higher inflation and persistent dollar shortages. These factors will lead to lower imports, investment, and slower economic growth.
“In order to bring back stability, the government will have to initiate a number of second-generation reforms in the coming budget. Despite all challenges, reform is the only way to go forward.”
“We hope, along with the mobilisation of external financing, the government will make serious efforts in initiating the much-desired second-generation reforms.”
He suggested the government undertake a series of structural reform programmes in the areas such as the banking and financial sector, trade facilitation, trade policy, affordable green housing for urban residents, green growth strategy and generation of renewable energy.
Mansur, a former economist of the International Monetary Fund, warned that household demand would be subdued with real wages declining in many instances due to higher inflation.
He applauded the measures initiated by the government to improve the situation.
Mansur said the social protection budget must be increased in the upcoming budget.
According to the press release, in Bangladesh, the budget deficit has been a common phenomenon.
This prompted Mansur to recommend the government take a cautious approach and make structural reforms to finance the budget deficit.
Syed Almas Kabir, president of the BMCCI, called for cutting corporate tax for non-listed companies and enhancing the tax-free income limit from the existing Tk 3 lakh to Tk 5 lakh considering the current inflationary pressures.
Sameer Sattar, president of the Dhaka Chamber of Commerce and Industry, suggested a financial source mapping for future investment that is needed for infrastructure development.
He added the tax net should be widened to include the persons residing outside Dhaka and Chattogram since most tax collection comes from the two areas.
Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association, said 3.5 crore people pay holding taxes across the country. On the other hand, about 30 lakh people submit income tax returns.
“Not all taxes can be imposed on traders.”
Syed Nasim Manzoor, president of the Leather goods and Footwear Manufacturers and Exporters Association of Bangladesh, urged the National Board of Revenue to keep the tax rate steady for at least the next five years because a frequent change in the tax rate makes businesses worried.
(TDS)
