Upcoming budget framing should consider global realities too, say economists

Economists have urged the government to frame the upcoming national budget considering not only the domestic economic situation but also global economic realities and trends.

The remarks came during a pre-budget discussion held at the National Board of Revenue (NBR) office in Dhaka's Agargaon today.

Professor Mahbub Ullah, president of the Bangladesh Economic Association, said, "The global economy is likely to witness turbulence, given what the Trump administration has started. 

"Therefore, this year's national budget must take into account not only domestic conditions but also international realities. We need to focus on tightening our belts."

Zaidi Sattar, chairman of the Policy Research Institute, said, "Local industries in Bangladesh are being given excessive protection, and the way supplementary duty has been increased in Bangladesh is non-compliant considering global standards, as flagged by the United States Trade Representative."

"These issues need to be rationalised," he added.

He also noted that the prices of imported consumer goods in Bangladesh are significantly higher than global market prices, and the upcoming budget should aim to provide relief to the general consumers.

Professor Mahbub also pointed out the inefficiency in the tax refund system. "Many taxpayers in the country do not receive refunds after paying advance taxes, which discourages them from paying income tax willingly," he said, adding, "This refund system needs to be simplified."

He also proposed raising the tax-free income threshold from the current Tk3.5 lakh to Tk6 lakh.

He further recommended allocating funds to complete necessary ongoing projects rather than initiating new mega projects.

Calls for not increasing corporate tax

Meanwhile, Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) leaders have urged not to raise the corporate tax rate for apparel exporters in the upcoming budget.

At present, readymade garment exporters pay 12% corporate tax, compared to the general corporate rate of 27.5%.

Enamul Haque Khan Bablu, former BGMEA director, said, "Gas prices have reached Tk40. The industry will not survive in this state anyway. This is not the right time to increase corporate tax."

The Bangladesh Textile Mills Association urged the rationalisation of the value of imported fabrics and the removal of complications related to HS codes and valuation.

Misuse penalties to be increased

At the discussion, NBR Chairman Abdur Rahman Khan said penalties for misuse in import-export processes will be increased.

"We will work to reduce non-tariff barriers and resolve existing issues with valuation and HS codes," he said. 

"Besides authorised economic operators, other businesses will also be allowed to clear goods through the green channel. However, misuse will be met with exemplary punishment. There is widespread abuse," he added.

The NBR chairman also mentioned that certain tax exemptions, especially on technology, may be reduced in the upcoming budget due to economic constraints. "Given the realities, some exemptions must be withdrawn. We will also focus on eliminating non-tariff barriers."

Snehasish Barua, managing director of SMAC Advisory Limited; Saleudh Zaman Khan Jitu, managing director of NZ Tex Group; BKMEA President Mohammad Hatem; and Md Alamgir Hossain, a representative of PricewaterhouseCoopers, also spoke at the discussion, among others.