This year the government has tried to increase revenue collection amidst efforts to contain inflationary pressure on the economy by controlling the budget deficit, reducing various import duties and advance taxes on various essential products. Import duty on almost 30 essential products has been reduced, which is a good move, said Ashraf Ahmed, president, the Dhaka Chamber of Commerce & Industry (DCCI) at the initial press reaction on June 6, 2024.
He also hailed the government’s bank borrowing target which is almost 11.82% less than the last fiscal. But still, it is high. He said if government borrowing increases, private sector credit flow may shrink. Ashraf Ahmed welcomed the initiative of the prospective tax system in place for the fiscal year 2024-25 and 2025-26, he said it is a good move and it may help boost FDI. He also suggested separating the tax code for the SME sector as the tax administrative system is a bit complex for the SME sector, he said.
This year's Budget deficit target is about 4.6% which is lower than previous years. It is implementable but the main challenge is revenue collection. Without widening the tax net it will be difficult to collect higher revenue. But we need to increase the tax-GDP ratio, he added. He said at present it is below 10% now but we need to increase it to at least 30% within the next decade. He also said that if we can overcome the liquidity crisis, it will be possible for us to attain the growth target. This depends on various macroeconomic scenarios and global geo-economic conditions.
Replying to a question from a journalist, he said, the government has reduced various taxes and VATs but on the other hand, a few items will see more tax, but as a whole, it may not impact the businesses too harshly. The main challenge for this year will be implementation of the good initiatives of this budget, he added.
Both for listed and non-listed companies, the corporate tax rate has been reduced by 2.5% but conditionally, which is a good move, he mentioned. He later stressed on ADP implementation for a sustainable socio-economic development. Later he thanked the government that this proposed budget tried to address the inflation issue as well as foster local investment, export diversification, widen the tax net, and reduce dependency on the financial sector to ease the deficit budget. -Press Release-