The government should ensure that its project expenditures are justified and beneficial to the economy, which will help reduce the tax burden on people, according to the Metropolitan Chamber of Commerce and Industry, Dhaka (MCCI).
In its post-budget reaction, the trade body on Friday in a statement suggested implementing effective financial management practices to limit government project expenditures.
Finance minister Abul Hassan Mahmood Ali placed before parliament the budget for the 2024-25 financial year on June 6.
The MCCI also urged precautionary measures in foreign exchange expenditure to maintain macroeconomic stability and regulate subsidies on electricity, gas and fertiliser prices.
A significant number of high-income entities remain untaxed, while individuals and businesses that comply with tax obligations face an increasing tax burden, the MCCI said, adding that the issue needed to be addressed properly.
The MCCI expressed concerns about the impact of rising inflation on future business expansion and advocated for a budget focused on pro-poor and inclusive growth.
The MCCI strongly opposed the opportunity to whiten undeclared money by paying only 15 per cent tax, viewing it as a penalty for compliant taxpayers.
It suggested introducing penalty provisions along with maximum tax rates to encourage regular taxpayers.
The proposed budget allocates Tk聽1,36,026 crore for the social safety net, a 7.72 per cent increase from the previous year.
The MCCI called for a judicious increase in this allocation.
Despite an inflation target of 7.5 per cent for the current financial year, the inflation rate reached 9.89 per cent in May 2023-2024 and has remained above 9 per cent for 14 consecutive months.
The MCCI deemed that the current inflation target of 6.5 per cent unrealistic.
In the statement, the MCCI highlighted the challenges faced by the finance minister in preparing the budget for the FY 2024-2025.
These challenges stem from inflation-induced export market contraction, a sluggish investment system, high bank loan interest rates, and ongoing geopolitical conflicts, it said.
The budget targets an inflation rate of 6.5 per cent and a gross domestic product growth rate of 6.75 per cent, aiming to maintain industrial activity through ongoing stimulus programmes and keep poverty rates low via social protection programmes.
The National Board of Revenue has set an increased revenue collection goal of Tk聽4,80,000 crore, 11.63 per cent higher than the target of Tk聽4,30,000 crore for the financial year 2023-24.
The MCCI recommended tax policy reforms, tax system automation, reducing system loss in tax collection and enhancing tax administration capacity to improve revenue collection effectiveness.
The MCCI hailed the reduction of the corporate tax rate by 2.5 percentage points for non-listed companies and one-person companies, but proposed extending this reduction to other listed companies.
Simply raising the tax rate without expanding the tax net will not achieve the desired tax-GDP ratio, the trade body observed.
The MCCI opposed the imposition of a minimum tax on company turnover, advocating instead for taxing only taxable income.
