Private sector entrepreneurs should be given priority so that they can lead the country’s economic recovery from losses incurred due to the ongoing coronavirus pandemic, said Salman F Rahman, private sector industry and investment adviser to the prime minister, yesterday. In the proposed budget for fiscal 2020-21, tax rates were increased and this acts more like a punishment for regular taxpayers, he said. Besides, the current VAT law is still similar to that of 1991 and needs to become more business friendly so that private sector firms can pay these taxes easily and without any hassle from field officers of the National Board of Revenue, Rahman said. The prime minister’s adviser also said that if the government overborrows from banks, it will cause trouble for private companies by disturbing the flow of finances. “More financing in the private sector would be better for the economy given the current slump in economic activities,” he added. However, economic recovery from the coronavirus fallout largely depends on how well Bangladesh’s healthcare system responds to the prevalent crisis. “We have to strengthen our healthcare system because there could be a second wave of coronavirus cases even after we recover from the pandemic,” said Rahman while addressing a virtual discussion. The discussion styled “Budget 2020-21: What is the takeaway for the business community?” was organised by the Metropolitan Chamber of Commerce and Industry (MCCI) in collaboration with the Policy Research Institute (PRI). Various ministers, two advisers to Prime Minister Sheikh Hasina, entrepreneurs, trade body leaders and economic researchers participated in the event, which was moderated by MCCI President Nihad Kabir. MA Razzaque, PRI’s research director, and Adeeb H Khan, chairman of MCCI’s tariff & taxation sub-committee, presented separate keynote papers during the discussion. “It is true that the government’s target to achieve 8.2 per cent GDP growth in the upcoming fiscal year is a bit unrealistic as businesses are going through a bad time due to the coronavirus,” said Planning Minister MA Mannan, adding that giving VAT collection officers more power would be counterproductive as it could lead to more cases of harassment. Imposing tax on an employee’s gratuity is not right either and the VAT refund system should be made simpler so that businessmen can easily collect their funds, according to Mashiur Rahman, the prime minister’s economic affairs adviser. Syed Almas Kabir, president of the Bangladesh Association of Software and Information Services (BASIS), said that imposing more taxes on interne and mobile phone services will discourage people from adopting newer technologies, creating a possibility for the government to lose more revenue from the sector than it can earn. For instance, the government could collect up to Tk 500 crore by imposing additional taxes on internet use. However, if left untaxed, the amount of revenue generated by internet and mobile phone services could be higher since more people would be engaged with those services as costs would be kept lower. There are currently about 10 crore people using the internet in Bangladesh, mostly through mobile devices. If prices are lowered, the number of users and the amount of time they spend on the internet would surely go up and this means increased revenue for the government as well, Kabir said. The government’s aim to take private sector investment to higher than 25 per cent of the country’s GDP is a very ambitious prospect since it has remained at stagnant at 23 per cent for many years now, said Abul Kasem Khan, chairperson of the Business Initiative Leading Development (BUILD). It was expected that non-listed companies in the private sector would see a 5 per cent reduction in corporate tax. However it was only decreased by 2.5 per cent from the existing 35 per cent, Khan added. Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), suggested that the government should effectively implement its stimulus packages so that firms, especially cottage, micro, small and medium enterprises, can continue to grow even during these troubled times. A complete reform of the country’s VAT law is required as the harassment businesspeople face under the current law is on the rise, said Rupali Chowdhury, president of the Foreign Investors’ Chamber of Commerce and Industry. “The effective VAT rate on honest taxpayers is also really very high,” Chowdhury added. While presenting his keynote paper, MA Razzaque said that if the economic development witnessed in Bangladesh during the pre-coronavirus era had held steady, then the country could have been free of extreme poverty by 2028-29. But the Covid-19 pandemic abruptly upset the economy in such a way that that it could take an additional 5 years beyond that point to reach zero poverty, Razzaque said while suggesting that the government should increase the flow of funding in the private sector and increase exports. Asif Ibrahim, chairman of the Chittagong Stock Exchange, recommended the government set corporate tax for listed companies at 20 per cent as opposed to the proposed 25 per cent to encourage more companies to go public.
