Budget ignores the capital market

The capital market of the country has been completely overlooked in the proposed national budget.

I am not a big fan of the sought opportunity to allow a free flow of black money into stocks. Because, previously, it neither helped the market nor encouraged honest taxpayers.

But, a few points I must mention, which have long been crucial to developing a capital market that would have meant to be the barometer and a financing powerhouse of the economy and the government continued ignoring them.

Listed firms were enjoying a corporate tax gap of 10 percentage points from that of their non-listed counterparts and in the last few years, the government reduced the gap to 7.5 percentage points, instead of widening it to incentivise listing.

The market, its investors and also the economy are suffering due to top performing corporates' reluctance to go public. However, it is still good news that listed firms were at least equally treated in terms of getting their corporate tax rate cut by 250 basis points.

The advance tax on stock trading was radically raised earlier last decade and the brokerage industry's request every year to rationalise it has been ignored this year too, hindering the industry's efforts to reduce the cost of trading in the market and increasing market liquidity.

Dividend income is being taxed twice in Bangladesh. Initially, at the source when a company disburses dividends, and again when the investors go to pay their own taxes. This should have been waived long ago to inspire long term investments, and the continuation of the wrong treatment of the taxpaying investors is unfortunate.

In a fresh blow to the bond market development efforts, any capital gains from treasury bonds have been made taxable.

The 'to-do' list is long, but we may discuss those only after the crucial issues are resolved.

Minhaz Mannan Emon is Managing Director of BLI Securities Ltd and was former director, Dhaka Stock Exchange