Tax-free income ceiling won’t be raised
May 18, 2009
Finance Minister AMA Muhith yesterday said the government would not raise the ceiling of tax-free income from the present Tk 165,000 in the next budget. He also said that the government would retain the pre-shipment inspection (PSI) system, as the customs department is not ready yet to take over the job despite widespread demand for scrapping such inspection services. “Considering the market prices and inflationary pressure I see no reason to up the ceiling further,” Muhith told a pre-budget discussion organised by the Economic Reporters Forum (ERF) at the National Press Club.
Predecessor AB Mirza Azizul Islam, who was present at the discussion, echoed Muhith’s view.
“The tax-free ceiling should not be raised even in next two years,” said the former finance and planning adviser.
However, business bodies, including FBCCI, and people from different quarters have long been urging the government to increase the ceiling of tax-free income to Tk 200,000 since day-to-day expenses of the middle class have increased significantly following inflation and spiralling prices of essentials.
Muhith also focused on issues like recession, energy crisis, public expenditure, revenue collection and government intervention in commodity market.
“PSI system will continue further,” said the minister. According to an agreement with the government, PSI system would be withdrawn by the year-end.
Different business chambers on many occasions have raised their voice against such PSI firms.
In Asia, the mandatory PSI system exists only in Bangladesh and Cambodia, with Pakistan discarding the arrangement in late nineties after a brief stint. The voluntary PSI system was introduced in Bangladesh in 1992, and it was made mandatory 8 years later in a bid to help generate revenue by minimising widespread corruption in customs.
The finance minister said although Bangladesh still remains immune from the recession fallout, the next six months would be crucial.
“We have to observe the situation seriously in the next six months,” said Muhith.
He however said the situation would start easing at the end of 2010 and get improved fully in 2011.
The finance minister said: “Government will intervene in the market through the Trading Corporation of Bangladesh.”
He admitted that a grim situation prevails in the country. “From now on all power stations will be duel fuel-based,” he said, adding that a coal policy would be formulated.
Muhith said the government is trying hard to improve the energy situation.
The minister expressed his dissatisfaction over the poor tax base. “Only seven lakh people among 14.5 crore pay taxes. It is a great shame,” he remarked.
He reiterated the government stance of not allowing any new tax holiday. The minister also said sick industries would not be given any facilities in the next budget.
Mirza Aziz projected next year’s GDP growth at 5.5 percent, lower than this year’s 5.8 percent, mainly because of the recession.
The former finance adviser opposed the demand for corporate tax reduction and tax holiday. He also viewed there should not be any zero duty facility for goods, except food items.
He also opposed further duty reduction for capital machinery and raw materials.
President of International Chamber of Commerce and Industry, Bangladesh chapter Mahbubur Rahman and Chairman of Association of Bankers Bangladesh Mahmood Sattar also spoke. ERF President Nazmul Ahsan chaired the discussion.
Source: The Daily Star
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