Representatives of different micro-credit institutions on Sunday said that if the government imposes taxes on micro-credit, the loan receivers would lose.
They also said that the government’s poverty alleviation programme would also be affected if taxes are imposed on micro-credit. They made the remarks at a press conference, jointly organised by Credit and Development Forum, the Federation of NGOs in Bangladesh and International Network of Alternative Financial Institutions, held at the National Press Club.
While presenting a paper, CDF chairperson M Mosharrof Hossain said that all micro-credit institutions were ‘non-profitable’ entities.
He said that these institutions’ surplus incomes are only used to alleviate poverty for which the government designated the income from micro-credit as ‘tax excluded income’ for last ten year.
But recently, the government has taken a plan to impose taxes on micro-credit, he said.
Mosharrof Hossain said that as a result of the initiative, micro-credit receivers would be affected directly and loan flow in poverty alleviation sector would be reduced.
Uddipan executive director Md Emranul Huq Chowdhury said that if any micro-credit institution incurred losses for three consecutive years, the MRA cancelled the institution’s license.
‘If the government imposes taxes then the institutions will be obliged to earn surplus income to avoid loss. The tendency could increase the rate of interest in the long-term,’ he added.
The speakers said that micro-credit sector’s surplus incomes were used to rehabilitate the poor people whose works could be affected if taxes are imposed on micro-credit.
They observed that the taxes, earned from micro-credit, would not earn any significant benefit but leave a direct negative impact on the sector.
The government’s image could also be affected by the initiative, they added.
They urged the government not to impose taxes on micro-credit and continue the poverty alleviation programmes.
The speakers further said that more than 700 micro-credit institutions in Bangladesh were working by taking certificates from the Micro-Credit Regulatory Authority.
At present there are about 2.5 crore micro-credit receivers in Bangladesh, they added.
The press briefing was attended, among others, by CDF executive director Md Abdul Awal, FNB director M Tajul Islam, Inafi executive director Atiqun Nabi, BRAC senior director (strategy, communications and capacity) Asif Saleh, and ASA executive vice president Md Fayzur Rahman.
-With New Age input
