The Dhaka Chamber of Commerce and Industry (DCCI) has praised the government's proposed budget for 2024-25 for its balanced approach to revenue collection and inflation control amid economic challenges.
DCCI President Ashraf Ahmed acknowledged the government's efforts to balance revenue collection with inflation control In a press briefing on 6 June.
“Import duty on almost 30 essential products has been reduced, which is a good move,” he said.
The proposed budget includes a reduction in the government's bank borrowing target, set to be almost 11.82% lower than the previous fiscal year.
However, Ashraf cautioned that even this reduced target remains high and could impact private sector credit flow.
“If government borrowing increases, private sector credit flow may shrink,” he warned.
Ashraf also praised the introduction of a prospective tax system for the fiscal years 2024-25 and 2025-26, suggesting it could help attract foreign direct investment (FDI).
He advocated for a separate tax code for small and medium-sized enterprises (SMEs) to simplify the tax administration system for this sector.
The budget deficit target has been set at 4.6%, which is lower than in previous years. Ashraf noted that while this target is implementable, the main challenge lies in revenue collection.
“Without widening the tax net, it will be difficult to collect higher revenue. We need to increase the tax-GDP ratio,” he emphasised, aiming for an increase from the current below 10% to at least 30% within the next decade.
Addressing concerns about tax adjustments, Ashraf explained that the reduction in various taxes and VAT might be offset by increased taxes on other items. “As a whole, it may not impact businesses too harshly,” he reassured. He stressed the importance of implementing the budget's positive initiatives effectively.
Corporate tax rates for both listed and non-listed companies will be reduced by 2.5%, albeit conditionally.
Ashraf welcomed this move and highlighted the necessity of effective ADP (Annual Development Programme) implementation for sustainable socio-economic development.
In conclusion, Ashraf expressed gratitude to the government for addressing inflation and fostering local investment, export diversification, and efforts to widen the tax net while reducing dependency on the financial sector to ease the budget deficit. “The main challenge for this year will be the implementation of the good initiatives of this budget,” he reiterated.
