The Centre for Policy Dialogue on Sunday opposed the government’s plans for reducing corporate tax and keeping the provision of legalising undisclosed money in the budget for the fiscal year of 2014-2015. In its recommendations for the upcoming budget, the private think-tank also apprehended that the economic growth might fall below 6 per cent in the next fiscal year mainly due to slowdown in economy and decrease in investment in the country.
Regaining momentum in economy and achieving gross domestic product growth at the rate of 6 per cent will be the major challenges for the government in the coming budget as the country is facing stagnation in investment, it observed.
Economy is moving from the phase of political unrest in pre-election period to the phase of political uncertainty of the post-election period that affected investors’ confidence, it said.
It also said that achieving the probable revenue collection target for the next fiscal year by the National Board of Revenue would be a very difficult job as the government might set a ambitious target at Tk 1,49,700 crore.
‘Corporate tax rate in Bangladesh is one of the lowest in South Asia and close to those of South Asian countries. So the government should not reduce corporate tax in the budget,’ CPD distinguished fellow Debapriya Bhattachariya said at a press briefing on the organisation’s budget recommendations at BRAC Centre Inn in the city.
The existing corporate tax at 27.5 per cent for listed companies is rational, he said.
‘The higher corporate tax for some sectors like banks and telecom is considered as super tax which is imposed for gaining higher profit and the practice prevails in all countries,’ he said.
In reply to a question on the provision of legalising undisclosed money, Debapriya said that CPD opposed the facility as it encourages taxpayers to evade taxes and the facility is against the rule of law.
The facility also failed to create any positive impact on investment situation, he said.
CPD executive director Mustafizur Rahman said that the government should ensure quality of government expenditure along with expansion of the size of annual development programme.
While presenting budget recommendations, CPD research director Fahmida Khatun said, ‘The logic that reduction of corporate tax will create a positive impact on investment is not correct as there are many other factors like political stability, adequate infrastructure and favourable business environment are needed for investment growth.’
She said the CPD placed a set of recommendations which would help the revenue authorities to achieve tax collection target.
The think-tank recommended that the government should revisit and rationalise tax incentive structure and phase out tax holiday facility gradually.
The NBR needs to be vigilant to curb tax evasion through mispricing and misdeclaration in trade and by foreigners working in Bangladesh.
The revenue board should also emphasis on collection of wealth tax particularly from owners of land, house and apartments in urban areas and need to design an action plan for the next fiscal year to bring tax defaulters and tax dodgers to book.
The research organisation also recommended expansion of value-added tax net in the country and exploration of new ways including formulation of leasing policy to tap non-tax revenues.
It said that that there should be a priority guideline towards quality implementation of the large projects under the annual development programme.
The government should give emphasis on utilisation of foreign loans and grants to ensure high rate of implementation of the ADP.
The CPD also said that it was important to re-estimate the cost of the Padma Bridge project and set the proposed tolls as the price of raw materials and services increased by this time.
The organisation also proposed a set of fiscal and budgetary measures including quick implementation of some mega projects like Padma Bridge, Rampal Power Plant, Ruppur Nuclear Plant, metro rail, deep sea port and Dhaka-Chittagong four-lane and establishment of special economic zones to remove stagnation in investment.
The government also needs to come out with an effective exit plan for the quick rental power plants, it said.
It also proposed that the government should set up an Agricultural Price Commission to ensure fair price of agricultural products, establish food safety authority and rural insurance entity to protect farmers from climate risks.
CPD also recommended for bringing more unprivileged people under the coverage of social safety net and raising the allowance for the widow, deserted and destitute people.
CPD additional research director Khondaker Golam Moazzem and senior research fellow Towfiqul Islam Khan also spoke at the briefing.
-With New Age input
