The budget has focused 8.2 percent GDP growth and 5.4 percent inflation. It is a progressive and high growth targeted budget, which is appreciable. We also appreciate the initiative of increasing investment and employment.
The budget is an inclusive one despite it is a huge expenditure budget which aims to increase investment, give stimulus to entrepreneurs and ensure social safety net. But implementing this huge budget is a big challenge, therefore, we need to re-consider the revenue collection target.
The revenue collection target for the National Board of Revenue (NBR) has been set at Tk330,000 crore which is 9.82 percent higher than the previous fiscal year's target.
But to attain this high target, the NBR needs to widen its tax net and strengthen manpower in the upazila-level for more tax collection. But the tax burden should not be imposed on the existing tax payers
Deficit budget is Tk190,000 crore which is 6 percent of GDP. To tackle the economic challenges, the deficit budget should be utilised to meet the basic needs of the people.
The government will borrow Tk84,980 crore from banks which is 3.10 percent higher than the previous fiscal year's target. The allocation in the annual development programme (ADP) is Tk205,145 crore. It is necessary to allocate more for the health sector under the ADP considering the Covid-19 situation.
Individual income tax limit has been increased to Tk3 lakh from the existing Tk2.5 lakh and we appreciate the decision. The lowest limit of tax rate is 5 percent and the highest tax rate is 25 percent. It may ease burden on taxpayers and more taxable people will be encouraged to pay tax.
Corporate tax has been slashed to 2.5 percent for non-listed companies in the private sector. Corporate tax should be cut a bit so that entrepreneurs may sustain in the post-Covid-19 situation.
We thank the government for increasing the time limit of paying tax and VAT without penalty. But 0.5 percent tax on annual turnover of Tk3 crore for an individual businessman will increase his cost of doing business.
VAT calculation should be based on product's value addition or its profit. So, automated VAT return system and simplification of refund system are necessary.
We welcome the government for giving stimulus to the industries. But it is essential to give waiver of advance income tax and advance tax on RMG, leather, jute and jute goods and agro-processing sector. Due to lower export orders, source tax on RMG exports from 0.25 percent to 0.5 percent will put the sector in a challenging situation.
So, the government should reduce source tax on RMG exports. We also welcome the decision of 1 percent cash incentive to RMG exports.
It is very commendable that the government has given a Tk20,000 crore stimulus to the micro, small and medium enterprises (MSMEs). The MSMEs should get easy access to loan under the stimulus package.
The government should impose 1 percent source tax instead of 2 percent on local Letters of Credits used for importing essential commodities.
It is necessary to form a high-powered advisory committee for the financial sector under the Bangladesh Bank who will guide the financial sector amid the coronavirus pandemic. Therefore, the government needs to ensure better credit flow to the private sector and easy access to loan under the stimulus package.
The budget allows to invest undisclosed money in the real estate, bank deposit, national savings tools and the stock market. It will help inject money through private investment in the economy, especially in the pandemic situation.
The government should allocate more in the health infrastructure under the ADP. Fast-track mega projects have been implemented quickly.
Subsidy in the agriculture sector has been increased to Tk9,500 crore which is appreciable. Some Tk5000 crore has been allocated for the agriculture re-financing scheme, and it will boost the agriculture sector. But more storage capacity is needed.
Skilled development and infrastructure are needed in the health sector to combat the coronavirus pandemic. Sufficient allocation is necessary to combat any pandemic in the future. The government should introduce health insurance for all and, private hospitals also should come under proper monitoring.
We hail the decision to allocate Tk95,574 crore for social safety net programmes. Poverty rate increased due to the virus. The poor and ultra-poor community should come under this social safety net. Sustaining existing employment is more challenging than creating new employment at this moment. The budget should have an allocation for up-skilling and re-skilling of the young generation.
Shams Mahmud is the president of Dhaka Chamber of Commerce & Industry (DCCI).