Proposed budget for FY17: Trade bodies slate money whitening

Different trade bodies on Friday expressed their concerns over the scope for whitening of black money by paying tax maintained in the proposed national budget for the next fiscal year saying that the scope would frustrate the honest taxpayers.
The Foreign Investors’ Chamber of Commerce and Industry in its budget reaction said the scope for whitening of black money on payment of minimum tax is highly discouraging for the honest taxpayers.
The chamber had earlier recommended withdrawal of such provision.
‘Instead of withdrawing the provision, the government has proposed a reduction in the rate of tax for such whitening of black money which will encourage more tax evasion and will frustrate the honest taxpayers,’ it said.
The chamber also suggested a reduction in the corporate tax rate in the proposed budget and cut in individual tax rates.
The FICCI observed that the higher rates of tax would draw more evasion.
The chamber said that widening of the scope of withholding tax and bringing of the same under the purview of audit would put an additional burden on the existing taxpayer in respect of the cost of doing business.
It said imposition of tax on the benefit from workers’ profit participation fund is conflicting with the labour law as the fund is exempted from tax under the labour act.
The chamber, however, appreciated the budget as the government proposed withdrawal of excess profit tax from banks, expansion of the limit of perquisites from Tk 4,50,000 to Tk 4,75,000 and withdrawal of the provision for approval of product price by divisional-in-charge on declaration of the same by a VAT-registered manufacturer.
The Bangladesh Chamber of Industries said that the scope for whitening black money in the proposed budget is disappointing.
If the black money is invested for buying land, the price of land would increase and it would hamper industrialisation.
The budget proposed withdrawal of supplementary duty on 1,200 products that would hurt the domestic industry, the local market would be the market of foreign products and employment generation would be stagnant, the BCI said.
The chamber viewed that the allocation of Tk 2,000 crore for the state-owned banks illogical.
‘It is meaningless to run the banks by giving subsidy,’ it said.
The BCI said that the proposed bank borrowing of the government for deficit financing would put a negative impact on private sector credit flow.
The chamber, however, appreciated the proposed budget as the government extended the package VAT system for the small and medium traders for next one year.
The Dhaka Chamber of Commerce and Industry urged the government to take initiative in the budget to reduce the cost of doing business and to ease the collection procedures of VAT and tax.
The chamber apprehended that the consumer spending would increase as the government targeted highest revenue earnings from VAT and tax.

News Courtesy: www.newagebd.net