This year the government has tried to increase the revenue collection amidst efforts to contain inflationary pressure on the economy by controlling budget deficit, reduction various import duty and advance tax on various essential products. Import duty on almost 30 essential products has been reduced, which is a good move, said Ashraf Ahmed, President, Dhaka Chamber of Commerce & Industry (DCCI) at the initial press reaction on Thursday.
He also hailed the government’s bank borrowing target that is almost 11.82% lesser than the last fiscal. But still it is high. He said if government borrowing increases, private sector credit flow may shrink. Ashraf Ahmed welcomed the initiative of Prospective tax system in place for the fiscal year 2024-25 and 2025-26, he said it is a good move and it may help boost FDI. He also suggested for separate tax code for SME sector as the tax administrative system is a bit complex for the SME sector, he said.
This year Budget deficit target is about 4.6% which is lower than previous years. It is implementable but the main challenge is revenue collection. Without widening tax net it will be difficult to collect higher revenue. But we need to increase the tax-GDP ratio, he added. He said at present it is below 10% now but we need to increase it to at least 30% within the next decade. He also said that if we can overcome the liquidity crisis, it will be possible for us to attain the growth target. This depends on various macroeconomic scenario and global geo-economic conditions.
Replying to a question of a journalist, he said, government has reduced various tax and vat but on the other hand a few items will see more tax, but as a whole it may not impact the businesses too harshly. The main challenge for this year will be implementation of the good initiatives of this budget, he added.
Both for listed and non-listed companies, corporate tax rate has been reduced by 2.5% but conditionally, which is a good move, he mentioned. He later stressed on ADP implementation for a sustainable socio-economic development.
Later he thanked the government that this proposed budget tried to address the inflation issue as well as fostering local investment, export diversification, widening tax net, reduce dependency on financial sector to ease deficit budget.