Wealth surcharge: Tax-free ceiling rises to Tk 40m

The interbank exchange rate for the US dollar reached Tk 108.70 each amid ongoing supply dearth of the greenback.The latest rate is the second-highest after May 22, when it rose to Tk 108.75 per dollar, according to the Bangladesh Bank (BB) statistics.The country’s commercial banks traded each dollar at Tk 108.70 among themselves on June 11, up by around 20 per cent from that of a year ago, the BB data showed.The local currency has faced depreciation by around 25 per cent during the last one year due to higher import payments along with slower-than-expected export earnings and remittance inflow.Bankers said the interbank dollar rate has risen mainly due to an increase in remittance rates as part of the central bank’s move to reach a market-driven exchange rate.On April 30, the Association of Bankers Bangladesh (ABB) and Bangladesh Foreign Exchange Dealers’ Association (BAFEDA) raised the dollar rate by Tk 1.0 to Tk 108 for remitters.Since then, the interbank exchange rate keeps increasing almost every working day to reach the record high of Tk 108.75 per dollar on May 22. After that, it declined a bit, but is showing an upward trend again.When contacted, Managing Director and Chief Executive Officer of Mutual Trust Bank (MTB) Limited Syed Mahbubur Rahman said the commercial banks are trading the greenback through interbank mechanism at a limited scale mainly because of the forex dearth.He said the central bank is making efforts to reach a market-based exchange rate by removing differences among the rates, and interbank exchange rate is also a part of the initiative.Even in the half-yearly Monetary Policy Statement (MPS), announced in January, the BB mentioned that the difference in the regulated rates would be maximum two-percentage points.Seeking anonymity, a central banker said the BB is making policy intervention to reach its target.The BB official also said the banks and BAFEDA earlier revised the exchange rate upward for export proceeds and remittance to Tk 107 and Tk 108.50 per dollar respectively. On the following day, the BB raised its exchange rate by Tk 1.50 to Tk 106 per greenback.Such revision would help lessen pressure on the falling forex reserve, which stood at US$ 29.88 billion on June 11, according to him.jubairfe1980@gmail.com

An uphill task it looks as the revenue authority has to realise nearly Tk 900 billion in revenue in June to reach the target for this fiscal year, passing through financial austerity.Its track record shows the National Board of Revenue (NBR) is left to go cracking on sources in the final month of the fiscal as it collects Tk 250 to Tk 300 billion in tax revenue a month.Until May 2023, the revenue board had collected Tk 2.80 trillion in tax revenue—mainly from domestic VAT, according to provisional data available with the NBR.The government set Tk 3.70 trillion as tax revenue-collection target for FY 2022-23.However, revenue collection until May had come close to the volume of taxes collected in the entire FY 2021-22 worth Tk 2.87 trillion.The VAT wing of the NBR collected Tk 1.08 trillion followed by Income Tax wing Tk 889.60 billion and customs duty Tk 836.85 billion in the July-May period.Target for income tax has been set at Tk 1.22 trillion while it is Tk 1.36 trillion for VAT and import taxes Tk 1.11 trillion in FY 23.NBR officials say share of indirect taxes is gradually going down in the tax-revenue collection. Import duty has declined to 28 to 29 per cent from earlier 45 per cent while direct tax increased to 33 per cent from 22 per cent.For the upcoming financial year, the Ministry of Finance (MoF) has set Tk 4.30 trillion as revenue-collection target for the NBR to play its prime part in financing an incremental Tk 7.62-trillion national budget of Bangladesh in keeping with the country’s LDC graduation despite some economic setbacks caused by the pandemic and the Ukraine war.Of the target, Tk 1.54 trillion is set to be collected by the direct-tax wing while Tk 1.16 trillion by the customs wing of the revenue board.However, the highest quantum is earmarked to be mobilised by the value-added tax (VAT) wing, amounting to Tk 1.59 trillion.The NBR officials said tax-revenue collection geared up in the month of May compared to that of the previous months of the fiscal due to intensified efforts of tax officials.Until April, Tk 2.50 trillion had been collected in revenue from domestic sources. Of the amount, Tk 980.15 billion came as VAT, Tk 780.58 billion income tax and Tk 742.22 billion import taxes.However, NBR officials said there would be a shortfall in revenue collection against the target by the year-end, like in previous years, as it is an uphill task to collect such a large sum of taxes in a shorter period.Economists, on the other hand, fear pressure to be built up on the existing smaller-than-probable number of taxpayers if the high figure of revenues for the final month has to be chased.Projections by two leading think-tanks signal high revenue shortfalls in the current fiscal. The Centre for Policy Dialogue (CPD) estimates the shortfall at Tk 750 billion while the Policy Research Institute (PRI) at Tk 546 billion.With the projected shortfalls in CPD and PRI calculations, the NBR will have to achieve over 32-percent growth in tax-revenue collection in the upcoming fiscal year to reach the Tk 4.30-trillion target.Domestic tax-revenue collection had faced a shortfall worth Tk 375.33 billion until April against its target. In the July-April period, the NBR achieved 5.90-percent growth over the corresponding period last year, according to provisional data.Revenue-collection growth was 12 per cent on average during the last five years.According to the PRI’s Study Center for Domestic Resource Mobilisation, tax-GDP ratio declined to 7.4 per cent in FY 2023 from 7.9 per cent last year.Dr Md Abdur Razzaque, Chairman of Research and Policy Integration for Development (RAPID) and Research Director of Policy Research Institute (PRI), said, “There is no easy solution rather than expansion of tax net to growth centres and other areas to speed up the domestic revenue collection.”He thinks the NBR might collect maximum Tk 3.25 trillion in revenue in the FY 23, leaving a considerable amount of shortfall.“With the below-par revenue collection, the government is in a problem on both sides as it has neither dollar nor domestic revenue to provide power subsidy,” he says.He suggests that the tax authority should not put pressure on existing taxpayers to mobilise higher revenue but explore new avenues to rope in more taxable people who are still out of the tax net.doulotakter11@gmail.com

Bangladesh has earned over Tk 4.13 trillion as foreign currency by exporting various products during July to April period in the current 2022-23 fiscal.Commerce Minister Tipu Munshi gave the information while responding to a question during the question-answer session in the parliament on Monday, reports BSS.He informed that the country got the earnings by exporting knitwear, readymade garment products, home textiles, footwear, frozen food, jute and jute goods, leather and leather goods.

Commerce Minister Tipu Munshi has expressed his hope that the country""s export earnings would be increased to $70 billion in the next fiscal year, 2023-24.The minister expressed the hope while responding to a question at the question-answer session at the Jatiya Sangsad in Dhaka on Monday, according to a BSS report.In his address at the parliament, Tipu Munshi pointed out various initiatives taken by the government in the last 14 years.With Speaker Dr Shirin Sharmin Chaudhury in the chair, the commerce minister said the government has formulated a series of import policies aiming to strengthen the position of the country for bringing mobility in the export trade under competitive global trade.To promote the export trade, Tipu Munshi said the government has encouraged the establishment of labour-intensive industries. Even the national export trophy 2018-19 was provided to encourage the exporters.The government has given importance to the service sector including information and communication technology, consultation service, construction and tourism for the expansion of the export sector.The export trade between Bangladesh and India also has increased significantly due to the SAFTA agreement signed among the SAARC countries.The government has developed the export development fund (EDF) to $7.0 billion aiming to facilitate procurement of raw materials for the exporters.

Accreditation and conformity assessment are crucial to achieving the country""s US$ 100-billion export target in the fiscal year (FY) 2025-26, said speakers at a programme in the capital on Sunday.They also said accreditation would also play an important role to maintain quality and standard of products to be competitive in the global market.The speakers opined that accreditation of products and services would support the (country""s) future prospect in global trade.They made the observations at a discussion, marking the International Accreditation Day 2023, jointly organised by Dhaka Chamber of Commerce and Industry (DCCI) and Bangladesh Accreditation Board (BAB) at DCCI auditorium.The theme of this year""s accreditation day was "Accreditation: Supporting the Future of Global Trade"."If we can maintain the quality of products and services, we can grab the international market easily," Industries Minister Nurul Majid Mahmud Humayun said as the chief guest at the discussion."For the sake of the country and creating confidence on our products in the competitive global market, BAB is working relentlessly to create awareness."He also said the accreditation system should be more effective, especially for the development of those industries that are related to health, security, safety and environment.Accreditation is an integral part of world quality assurance system, he opined."In order to increase export of our locally made products in the international market, we need internationally accredited and credible national quality infrastructure."He further said in this era of free economy, many countries impose various technical barriers to trade for protecting their respective products, and most of those (barriers) are related with quality certification."Therefore, accreditation is currently an important tool for creating a strong export market," he maintained.Ministry of Industries Secretary Zakia Sultana, who was the special guest, said in order to secure future trade there is no alternative to accreditation.She stressed on producing quality products and services to be competitive in the global market, where taste and attitude of consumers are always changing.Accredited (local) labs are accepted in the international market, and BAB has already accredited 124 institutions so far.She also informed that at present 21 Bangladeshi products need accreditation from India""s National Accreditation Board Limited (NABL) to enter Indian market.In this regard, she focused on the need to enhance the capacity of BAB, so that Bangladesh""s accreditation system could get easy acceptance worldwide."People are not still aware of importance of accreditation. So, we need to create mass awareness. If we can have our laboratories accredited, our export will get a boost."BAB has recently started Halal Accreditation Scheme, she added.DCCI President Md Sameer Sattar said Bangladesh""s total trade in the international market was $ 141.42 billion in 2022, and its export was more than $ 52.08 billion in the last FY. Bangladesh is gradually progressing to an export-oriented country from an import-dependent country."For this, export accreditation is a very important tool. To show the quality of specific products, we need internationally accredited certificate, and these certificates play a pivotal role in boosting export."After Bangladesh""s graduation from a least developed country (LDC) in 2026, maintaining compliance of locally produced goods would be a great challenge, the DCCI president noted."To face this challenge as well as meet the GSP+ and other compliance criteria, accreditation will play the vital role."He stressed on capacity building and ensuring quality infrastructure of all testing labs as well as BAB.BAB has to work hard to ensure standard and compliance for a sustainable economic growth, he added. BAB Director General (additional secretary) Md. Monwarul Islam presided over the event.He said the world is moving towards the Fourth Industrial Revolution, and new technologies are coming one after another.In the global free market economy and with the ever-changing dynamics of technological advancement, there is no alternative to accreditation of products and services to compete with other economies.At present accreditation is not an auxiliary system, but a must for world trade. Accredited products or services can enter any country easily, the BAB DG stated.BAB has taken initiative to get the membership of International Accreditation Forum (IAF), he mentioned.talhabinhabib@yahoo.com

Speakers at a seminar on Saturday stressed the need for making coordinated efforts by the country""s seven authorised investigation agencies to check money laundering.The need for ensuring financial intelligence support, storage of all trade-related information, increased efficiency through advanced technical training, strict monitoring and reporting of suspicious transactions, use of artificial intelligence and technology, and G2G bilateral agreements were also highlighted.The speakers put forward the recommendations at a seminar on "Money Laundering: Trends and Combating the Challenges" held at the CID headquarters in the city.They also emphasised the importance of carrying out nationwide campaign and awareness-building programmes on money laundering, and appointing a panel of lawyers for prosecution of relevant offences.CID Chief and Additional IGP Mohammad Ali Mia was present at the seminar as the chief guest while Head of BFIU (Deputy Governor of Bangladesh Bank) Md. Masud Biswas and Joint Director of Customs Intelligence and Investigation Department Edip Billah were present as the special guests.Chaired by CID DIG (HRM) Md Mainul Hasan, researcher and training expert Associate Professor Dr. Khan Sarfaraz Ali presented the keynote speech.The seminar elaborated on the dynamics of financial crime especially money laundering and prevention strategies.Under the initiative of the CID, a total of 450 officers received training in seven batches on financial crimes to improve their skills in conducting investigation and monitoring.The seminar shed light on money laundering-related crime prevention, identification of criminals, conducting investigation of cases, family and social awareness to face all the challenges.The CID chief handed over certificates to the participants of the seminar, held as part of the officers training programme.The CID chief said various financial institutions, trade-based businesses, real estate and non-profit organisations do money laundering through placement, layering and integration methods."Prevention of money laundering is very important in a country""s fight against organised crime, economic stability, transparency of the financial system and prevention of corruption," he said.CID is playing an important role in investigating money-laundering cases and preventing money laundering, which has already gained considerable reputation at home and abroad.He also said that prevention of money laundering requires mutual coordination, cooperation, experience and information sharing, use of advanced technology, strict supervision and control.bdsmile@gmail.com

The government expects that the country’s current-account deficit will go within the next two years after remaining in negative territory for most of the past decade or so.However, economists differ with the prediction made by the Ministry of Finance.“...in the medium term, the BOP (balance of payments) situation will improve further, and the current-account balance would return to a positive quadrant by the end of FY 2025-26,” the Medium-Term Macroeconomic Policy Statement (MTMPS) released on June 01 said.The current account tracks a country’s international transactions in goods, services, income and transfers, according to Investopedia. The current account affects the balance of payments, which records all economic transactions with the rest of the world. Together, they provide insights into a country’s economic relationship with other nations.By FY26, the MTMPS mentioned that export earnings may reach US$ 78 billion and imports may stand at US$ 101 billion.The gross foreign exchange reserves may then reach US$ 48 billion from the present amount of less than US$ 30 billion, it added.Bangladesh Bank data shows that during the July-April period of the current fiscal year, the current account deficit was US$ 3.772 billion, while the gap was US$ 15.486 billion in the same period of the last fiscal year. In the entire fiscal year 2021-22, the deficit was $18.697 billion.The MTMPS noted it has been more than a year since the Russia-Ukraine conflict broke out and still there is no sign that the conflict will subside soon.The fighting in Ukraine is expected to intensify during the next few months, and if it turns out to be a larger conflict involving other countries, the world economy will most likely enter an unprecedented perilous phase, it said.“Bangladesh is already tackling pressure emanating from the BOP situation. The measures that are being undertaken to improve the situation will be (the) key and hence will need to be implemented carefully,” notes the MTMPS.If the current negative growth of imports continues and export growth remains stable, the BOP problem will eventually fade away. “To expedite the recovery phase, inward remittanceand disbursement of foreign loans against projects and budget support will also need to be facilitated,” it said.Contacted, DrDebapriya Bhattacharya, a distinguished fellow at the Centre for Policy Dialogue (CPD), differed with the assumption and said the government’s Medium-Term Macroeconomic Frame-work is “fundamentally flawed”.“The way the growth and investment figures were harmonised compared with import, tax, and current account figures is fundamentally flawed,” he said.“It has nothing to do with reality,” Mr Bhattacharya said.He found a similarity between the macroeconomic framework of the 8th Five-Year Plan and the medium-term macroeconomic framework in terms of imperfection.“These are speculative numbers, have no basis in reality,” he said.syful-islam@outlook.com

Bangladesh would make its strides to reduce reliance on debt in the medium term amid two key macroeconomic challenges - low revenue collection and high-interest rate regime.To face the looming challenges, the finance division came up with the strategy for the next three financial years (FYs) as suggested in its latest Medium Term Macroeconomic Policy Statement (MTMPS) for FY 2023-26, released with the proposed budget documents.It recommended adopting a comprehensive and integrated approach to debt management, improving revenue collection, and exploring alternative financing mechanisms to cope with the challenges.The low revenue collection is limiting the capacity to invest in infrastructure and other developmental projects, it observed, adding that the low tax-GDP ratio also affects the debt sustainability.This issue is further exacerbated by the LDC graduation deadline in 2026, which would affect the country""s access to concessional financing from international sources, it noted.Dr Zahid Hussain, former lead economist of the World Bank""s Dhaka office, however, observed that there is no logic for exploring alternative financing mechanisms because no other alternatives are there for the government."The government should rather give attention to full utilisation of the existing and potential low-cost loan options," he told the FE on Thursday.He added that Bangladesh still receives low cost loans from the development partners like the World Bank, Asian Development Bank, Japan International Cooperation Agency (JICA), and Islamic Development Bank (IDB).However, the country is failing to fully utilise the funds."The options for soft loans are still there," he said, adding that the International Development Association (IDA) will come up with larger loans in the next year while Bangladesh is the major beneficiary of such IDA loans.The finance division found, according to the MTMPS, a high-interest rate regime both in the domestic and international markets as another key challenge for the country""s economy.The high-interest rate regime is increasing the government""s borrowing costs and putting a strain on public finances, it said."This situation is further compounded by the increasing financing needs of the government to fund critical infrastructure projects, social safety nets, and other development initiatives," it added.The MTMPS identified that the segmented debt offices within different offices and agencies have led to coordination challenges in debt management, which could potentially affect the country""s overall fiscal sustainability."It is crucial to address these issues promptly to ensure that the country""s public debt remains sustainable and supports the long-term development goals of Bangladesh," noted the policy statement.The management of external debt redemption is a crucial aspect of debt management in Bangladesh. The country""s external debt comprises both concessional and non-concessional loans, which have varying maturity periods.At the end of FY 2021-22, the government paid back US$1.5 billion in principal repayment for external debt, and this amount is expected to rise to $2.1 billion in FY 2022-23.The principal repayment in FY 2023-24 is projected to be $2.4 billion, and it will further increase to $2.6 billion by the end of FY 2025-26."Managing the debt service obligations is essential for ensuring financial stability and preventing liquidity crises," said the MTMPS.The finance division said the expansionary fiscal policy will continue in the medium term to ensure recovery from the negative impact of the Covid-19 pandemic.This will help the debt-GDP ratio grow from 32.4 per cent in FY 2020-21 to 38.5 per cent in FY 2025-26.Both the domestic and external debt stock, in percentage of GDP, will continue to grow in the medium term.The external debt stock will grow faster than the domestic debt stock. At the end of FY 2025-26, external debt stock will reach 14.8 per cent of GDP and will constitute 38.6 per cent of total debt stock, it projected.syful-islam@outlook.com

Deficit in democratic accountability negatively impacts Bangladesh’s revenue collection, public expenditure and annual development programmes, Debapriya Bhattacharya of the Centre for Policy Dialogue (CPD) said Wednesday in swinging criticism of the new fiscal measures.He told a budget-review meet that the country’s budget-implementation performance in terms of revenue mobilisation, public expenditure, and ADP had deteriorated following the 2014 and 2018 elections.“The current crisis is directly linked to the deterioration of the country’s democratic practices,” said Mr Bhattacharya, a distinguished fellow of the CPD and also Convener of Citizens’ Platform for SDGs, Bangladesh—another interlinked private think-tank.He fulminated that the estimated data and figures in the proposed budget for fiscal year 2023-24 are “mostly myths and exaggerations which have fallen into a vicious cycle, driven by political ambitions ahead of next year’s general election”.“These have severely compromised the credibility of various estimates such as inflation, exchange rates, and others,” he observed.The economist pointed out country’s gross domestic product (GDP) target set at 7.5 per cent which he termed “purely political ambition, because, according to the FY23 latest outcome, it is just 6 per cent, which is not at all consistent with our macroeconomic reality”.He goes on to say: “It seems to be prepared for political ambition ahead of next year’s elections.”The media briefing, styled ‘National Budgets in Bangladesh - Myths and Realities’, was jointly organised by the CPD and the Citizen’s Platform for SDGs, Bangladesh, in collaboration with the European Union in Brac Inn in Dhaka.At the same event, Sultana Kamal, member of CPD Board of Trustees, and former adviser of a caretaker government, said the disadvantaged and poor of the country are mostly invisible in the proposed budget.“By analysing the budget, it seems to me that the poor and marginalized people of the country are invisible.”It also seems to her that marginalised and poor are deprived from some basic rights because they are poor.Mr Debapriya, in his keynote presentation, further alleged that Bangladesh’s growth is no longer a matter of statistics, but an expression of political ambition.The presentation states that as per Bangladesh Bureau of Statistics (BBS), the country’s average inflation reached 8.8 per cent at the end of May, when the Ministry of Finance in their budget estimated this rate at 6 per cent for FY24.He feels that markets will be bullish if there is any doubt about the inflationary target as it is a very fundamental target.“Not only was the budget implementation, government also unable to fulfill the monetary policy,” Debapriya also said. They set the exchange rate at Tk104 in the FY24 budget but it is already Tk108 now.Debapriya finds a lot of discrepancies between the estimate and reality in the budget document.The presentation also notes that investment figures presented in the budget were different from the BBS provisional estimates for FY23. Poverty rate has declined sequentially in the country but inequality has worsened with urban inequality increasing faster – both in terms of income and consumption, while wealth inequality is even higher.The presentation claims there is no clear indication how in FY24 import will grow, forex reserves will improve, and exchange rate will appreciate at the same time in FY2024.Total Social Safety Net Programmes (SSNP) budget increased marginally– declined both as a share of the national budget and GDP. “SSNP budget continued to remain artificially inflated, seemingly unrelated allocations are reported in SSNP list.”Distinguished Fellow of CPD Dr Mustafizur Rahman said sloth budget-implementation process has interrelations with current crisis. “There must be reward and punishment for the project- implementation delays.”Executive Director of CPD Dr Fahmida Khatun said the budget did not get enough attention on climate- change impact, SSNP.Whatever the budget allocations in the different areas for specially marginalised and poor, it will not get targeted result for the lack of implementation capacity, she added.Asif Ibrahim, Chairman of Chittagong Stock Exchange (CSE), told the meet that the entire budget document did not mention “capital market” even once.“There is no alternative of capital market for long-term investment for the development and private- sector investment,” he said.Samir Ranjan Nath, Programme Head, BRAC Institute of Educational Development, said education budget didn’t increase as much as rises in entire budget.He said the real allocations on education are much less than the allocation shown in the budget documents.bdsmile@gmail.com

Economists, experts and business leaders in a post budget meeting on Wednesday termed inflation, huge bank borrowing, forex situation and tax administration as the major factors ahead of the country’s economy.“Total domestic financing requirement of the budget will be about Tk. 1.6 trillion and since nonbank financing in the form of National Savings Certificates is very negligible or negative almost the entire amount would need to come from the domestic banking system,” noted economist Dr Ahsan H Mansur told the meeting organised by the American Chamber of Commerce (AmCham).He noted that since the schedule banks are already suffering from liquidity shortage and very slow deposit growth (7.5 per cent till April), government borrowing from the schedule banks will lead to crowding out of the private sector and push up the lending interest rates sharply.Banks total capacity to expand credit will be less than Tk. 1.5 trillion, which would barely be adequate for the private sector requirements, he said adding that thus budget financing inFY24 would need to be primarily from the cent bank in the form of high power money creation.“Bangladesh will need to mobilize about $10 billion in net financing from external sources for budget financing which is equivalent to about Tk. 1trillion” he said.“Given the need to pay back about $2 billion in principal repayments, the gross financing requirement will be about $12 billion. Bangladesh has never borrowed such a high amount in the past.”“Limited or no access to the international capital market, and the recent downgrading of Bangladesh’s sovereign rating by Moodys will not allow exploration of new sources in FY24,” he said highlighting the challenges.“Inflation is almost 10 per cent and accelerating while global commodity prices are declining and down to below pre-Ukraine Russia war level.” he said noting that no monetary policy measure has been taken to fight inflation, as of now.“Concern over interest payment -- both foreign and domestic is increasing over time. It is projected to surpass Tk 1,000 billion in FY24 which is about 30 per cent of the NBR revenue of FY23,” he added.Key Macroeconomic Developments and Concerns in FY23Much lower growth (6 per cent +) compared to the original target of 7.5 per cent. The growth estimate is likely to be lowered once data for the final quarter of FY23 are taken into account.Much higher inflation (9.9 per cent in May) than the target of 5.6 per cent set in the FY23 budget.Much lower tax collection than the budget target.Significant fall in imports ($58.3 billion during Jul-Mar FY22 to $52.2 billion of July-Mar FY23 from (with negative implications for economic activities)He said the external current account deficit significantly declined due to import compression resulting from the ongoing dollar crisis.The newly emerged deficit in the Financial Account of the BOP is a matter of serious concern, said Dr Mansur.Dwelling with the inflation situation Planning Minister MA Mannan said inflation is caused by a lot of factors, many of which are beyond the control of the government. A different matter is not all in our control.He explained that in the wake of the twin shock of Covid and the Ukraine war, country does not have enough dollars to intervene to keep supply situations normal.But he said that the government is taking measures to ensure sufficient stock of very essential commodities like rice, salt, onion etc in different points across the country so sufficient supply can be insured to prevent market manipulation.He mentioned that though in the media the IMF has become a big player, in reality they do not.“There is no pressure from them and that is beyond their mandate,” Mr Mannan said adding that there is no point in considering the IMF as ’a pressure machine’.The planning minister said that the national budget for the next fiscal was formulated against the backdrop of the fall out of the Covid pandemic, and the ongoing Ukraine war.On the advance income tax, he said that personally he is against such measures but this types of step was taken to mobilise revenue.On the proposed income tax law, Dr Ahsan Mansur said, though the country needs new income tax law, the government needs not to rush to pass it.We also need to be careful not to rush it.He suggested that the new income tax law should be formulated in line with the best international best practices.“It should not be quote unquote homegrown no I don""t believe in that,” adding that consultations with internal experts must be done before finalising the law.“Otherwise, I""m afraid of our tax administration people with very limited knowledge about international tax laws.”AmCham President Syed Ershad Ahmed presented some recommendations to the government in his speech.On the issue of Foreign Exchange Reserve the AmCham president said, “Instead of gross import ban, the country should speed up the foreign-funded projects’ implementation and reconsider own funded projects having a sizeable import component to ensure safeguard against economic shocks caused by volatile energy inputs price and help finance balance-of-payments deficits.He also noted that instead of traditional heavily RMG dependent export basket, policy support should be extended towards business/industry for effective implementation of existing policy, create a user-friendly process and further allocation national funds to enhance this potential source.The Chamber recommends more allocation in Energy and power and expect focus on offshore explorations as well as investments in renewable energy.This will not only benefit us environmentally but also contribute to economic growth through job creation, market expansion in related industries supporting clean-energy technologies.On the issue of Import Duty and minimum tax, Mr Ershad said considering the advance tax as minimum tax paid by an industrial undertaking at import stage on raw materials in certain industries and the fixed 5 per cent minimum tax on the gross receipt would be detrimental for the existing investors, hence request to revisit this proposal for the best outcomes for businesses and consumers alike.Prescribing reforms in the National Board of Revenue, the AmCham President said, policy formulation and administration both should not be entrusted with NBR.“In addition, we suggest adopting automation in all possible levels at the same time to focus more on expanding Tax net. We specially suggest the full-fledged VAT automation which is on the card for last 12 years” he added.Suggesting strengthening of the Digital Economy, he said, “We understand the government’s vision to have a cashless society. Toward the effective implementation of this initiative ensuring accountability and transparency throughout the process, we propose to introduce the Digital or e-payment incentives to encourage the systematic strength.”The AmCham expressed deep concerns over the newly increased tax burden on Information and communication equipment and operating software which is ‘inconsistent with Smart Bangladesh objective’.To ensure banking sector stability he the Chamber recommends adoption of prudent central bank management strategies that promotes transparency, accountability and fiscal discipline in this sector.He also stressed the need for improved logistics infrastructure to raise competitiveness.Former NBR chairman Muhammad Abdul Abdul Mazid said that the authority of policy-making and enforcing the same policies should not be given to the same bunch of people.He said the NBR people should act as facilitators not as rulers.mirmostafiz@yahoo.com

Blaming price spiral on global inflation, instead of demand management through interest-rate raise and reducing budget deficit, reflects ‘political convenience’, economists and business leaders said Saturday.At a budget-review meet they suggested reform of the taxation system and bifurcation of the revenue authority into policy and tax-collection bodies to break an alleged nexus between a section of tax-collectors and taxpayers as part of measures to enhance revenue and thus reduce budget deficit.The proposed budget for fiscal year (FY) 2023-24 has focused on boosting growth, not on macroeconomic stability, with little effort to reduce demand through lowering fiscal deficit,saidDr Sadiq Ahmed, vice chairman of the Policy Research Institute (PRI).The budget has set an ambitious GDP-growth target again, like the budget for FY 23, without addressing the persisting slowdown in the growth of domestic credits by reducing bank financing of the budget deficit.The post-budget discussion was jointly organised by Metropolitan Chamber of Commerce and Industry (MCCI), Dhaka, and the PRI on “Bangladesh from Vulnerability to Resilience and Rapid Inclusive Development”.Planning Minister MA Mannan attended the programme as chief guest.Dr. Zaidi Sattar, Chairman, PRI, focused on shifting the dependence on trade taxes as a way of reducing the pinching inflation.Habibullah N. Karim, Vice-President, MCCI, moderated the panel discussion.MCCI Senior Vice-President Mr. Kamran T. Rahman made the welcome remarks.Dr Sadiq said blaming the sustained inflationary spike on global inflation and Ukraine war is politically convenient but not entirely based on fact as domestic inflation sustained for a longer period owing to the absence of adequate demand- management policies.He suggested‘demand-reduction’ policies through hike in interest rates through which many countries, including India, Thailand, Vietnam, the USA, and the EU, succeeded in reducing inflation.Ontax-GDP ratio, he said inability to introduce meaningful tax reforms over the past several years has constrained tax-revenue mobilization.He suggested a set of reform initiatives, including separation of tax planning from tax collection, conducting audits by trained and professional tax auditors, and introduction of property tax.“The government should convert the National Board of Revenue (NBR) to a tax-service agency from tax- policing department,” he said.He also suggested turning around the performance of the state-owned enterprises (SOEs) through corporate governance and pricing reforms that could yield an additional 1.6 per cent of GDP as revenues for the government.Dr Zaidi Sattar also feels that the government will have to shift reliance on import taxes, which seems inadequate in the proposed budget.“It’s a welcome move that supplementary and regulatory duties on some products have been withdrawn in the budget but larger number of products should be included in the list of waiver,” he said.He thinks the persisting inflation could be cut by 1.0 to 2.0 per cent if the government relaxes import taxes.While making a brief presentation on the proposed budget, Adeeb H Khan, Member of the Board of Directors, MCCI, said the provision of new income- tax law, to be placed in parliament soon, have to be made available for stakeholder review by giving sufficient time and opportunity before making it effective.Responding to a question, he said the proposed measure on imposition of minimum Tk 2000 on people requiring to submit tax return despite having below-taxable income is ‘against the principle of tax law’.He said hike in taxes on transfer of land, building property, imposition of tax on foreign loanmight cause escalation of costs of taxpayers.He said trucks and buses are more polluters of environment compared to that cars while environment surcharge has been proposed to be imposed on cars.Planning Minister MA Mannan suggested reviewing the upward adjustment of wealth surcharge, questioning its justification, while supported the minimum tax Tk 2000 on individual on a trial basis.Mr Mannan would like implementation of Tax Return Preparer (TRP) concept in phases and on a pilot basis at first.He agreed on MCCI proposal about the need for communication and consultation with the business community before the passing of the new Income Tax Act 2023.MCCI Secretary-General and CEO Mr. Farooq Ahmed moderated the event.Speaking at the programme, Kamran T. Rahman suggested an interim evaluation of the budget after three months.Dr Sadiq pointed out four major challenges of this budget: restoring macroeconomic stability, the challenge of revenue mobilization, prudent financing of the budget deficit and protecting social sector spending.Former president of the Institute of Chartered Accountant of Bangladesh (ICAB) Md Shahadat Hossain finds a lack of confidence between taxpayers and taxmen which should be resolved to encourage people to pay taxes.Other topics that came up during the panel discussion were the need for a reduction in Advance Income Tax (AIT), the multi-layered tax on company dividends, revenue mobilization, the low tax-GDP ratio, the lack of confidence between taxpayers and tax-collectors, the doubling of property-transfer tax, and the requirement for all TIN-holders to pay Tk 2,000 tax to avail 44 types of government services despite not having taxable incomes.doulotakter11gmail.com

After nine years of profit-making, forty-nine state-owned enterprises (SOEs) are set to count massive losses in the outgoing fiscal year (FY), 2022-23.According to the Bangladesh Economic Review-2023 released last Thursday, the net loss of those companies and corporations has been estimated at Tk 137.41 billion (provisional figure).It said the SOEs had been making profits after FY13 when the net loss of the public entities was around Tk 26.05 billion.Since then, the margin of their net profits kept rising and reached as high as Tk 151.60 billion in FY21.After that, the public entities started witnessing the flip side of it as their net profit fell massively to reach Tk 17.08 billion in FY22.The balance sheet of the SOEs suddenly turned too grim mainly due to worst performance of the Bangladesh Petroleum Corporation (BPC) and the Bangladesh Power Development Board (BPDC) whose loss-making rose manifold in FY23.Among the enterprises, the BPC suffered the highest Tk 70.87-billion losses, which was over 257 per cent higher than the last fiscal""s Tk 19.83 billion.The BPDC came second with its loss estimated at Tk 69.69 billion in this outgoing fiscal. In FY22, its total net loss was Tk 32.43 billion.The Bangladesh Sugar and Food Industries Corporation (BSFIC) become third with suffering a financial loss of Tk 6.78 billion followed by the Bangladesh Jute Mills Corporation (BJMC) of Tk 2.48 billion.Five others also joined the ranks of loss-makers. They were BBC, BSCIC, BIWTC, BPRC and BTMC.On the other hand, the Bangladesh Bridges Authority (BBA) made the highest profit of Tk 28.43 billion followed by the Chittagong Port Authority (Tk 13.92 billion) and the Bangladesh Oil, Gas and Mineral Corporation (Tk 4.72 billion).When contacted, Policy Exchange of Bangladesh chairman Dr M Masrur Reaz said the prices of petroleum products and LNG in the global market increased significantly last year because of the volatility on global macro-economic fronts following the Russia-Ukraine War."And it heavily impacted our economy. That""s probably the reason behind the massive losses of BPC and BPDC as they had to pay the additional costs in importing petroleum products and gas to produce power," he added.Questioning the necessity of having too many SOEs in the country, Dr Reaz said the government should skip the mindset of doing business while the track record of the SOEs was not good for the country."I think the government should privatise the SOEs to avert any further stress in the form of spending public money to make the entities alive," he observed.jubairfe1980@gmail.com

The government will continue with its cautious and accommodative policy to tackle instability in balance of payments (BoP) and foreign-exchange reserves in fiscal year (FY) 2023-24.On the other hand, the central bank, as part of the government""s plan to remove defaulted loans and other anomalies in the financial sector, will implement various procedural guidelines, being prepared as per BASEL-III, in phases.Finance minister AHM Mustafa Kamal in his speech for the FY ""24 proposed budget said instability in BoP lessened following the government""s adoption of the time-befitting strategy."We""ll remain cautious and adopt an accommodative policy in the coming FY as well," he added.Mr Kamal said the gap between multiple exchange rates is being brought to a minimum level with the aim of making the exchange rate gradually market-oriented.To rebuild the foreign-exchange reserves, the current initiatives of verifying the accuracy of the prices of imported items along with implementation and monitoring of procedural requirements on LC opening, disposal and related issues will continue in future.To encourage the use of formal channels in sending remittance, he said, a 2.5-per cent incentive is provided and remitter-friendly processes, including the mobile financial services, are being promoted.All fees required for sending remittance through Bangladeshi banks and exchange houses have been exempted, according to the minister.Thanks to these initiatives, he said, remittance income is on the increase. Import growth has declined and is returning to normal. "Concurrently, we""re carrying out export promotional activities to augment our export income. Steps are being taken for disbursement of foreign loans in the pipeline. Hopefully, the reserve situation will improve in a short period of time."However, latest statistics show, a downturn in remittance continues as Bangladesh saw receipts drop 10.27 per cent year on year in May, in a further pressure buildup on the country""s foreign-exchange reserves.The sharp fall in remittance inflow mounts the pressure on the country""s falling forex reserves, which now dropped below US$30 billion as on Thursday.The remittance inflow stood at $1.69 billion in the just-past month compared to $1.88 billion in the same month a year ago, the Bangladesh Bank (BB) data showed.Compared with the remittance earned in April 2023, it increased but the increase is as little as $6.72 million.Officials at the central bank said the latest fall in the reserves is due mostly to two factors --growing sales of the greenback to banks to settle their LC-related payments amid forex dearth and comparatively lower earnings from the source of remittance in May.Seeking anonymity, a BB official said the central bank sold around $12.0 billion up to May of this fiscal compared to US$7.62 billion in the entire financial year of 2021-2022. "This put pressure on the reserves."They were expecting the volume of remittance to increase in April when the Muslim-majority country celebrated Eid-ul-Fitr, the largest religious festival for Muslims across the globe."But we did not receive the expected level of foreign currencies from the remitters this time. We hope the latest hike in the exchange rate for remittance will encourage the remitters to send in more foreign currencies in the coming days," the official said.Very recently, Bangladesh Foreign Exchange Dealers"" Association (BAFEDA) and the Association of Bankers, Bangladesh (ABB) had increased the exchange rate on remittance by Tk 0.50.With the revised rates by the foreign exchange dealers and banks, the Bangladeshi expatriates working abroad are now getting Tk 108.50 per dollar. According to the BB data, the volume of forex reserves dropped to $29.91 billion on May 01, 2023 from $30.96 billion recorded on the previous day.jubairfe1980@gmail.com