Country’s top trade body leaders in a joint press statement on Monday demanded deletion of certain proposed new provisions in the VAT Act 2012 and Income Tax Ordinance 1984 in order to maintain a business-friendly tax regime in light of the Covid-19 Induced Economic Situation
“The proposed Budget for 2020-21 against the backdrop of the Covid19 pandemic, its effects on the global economy and on Bangladesh in particular, is probably destined to be one of the most important in recent history for Bangladesh”, the statement said. Country’s largest chamber, the Dhaka Chamber of Commerce and Industries (DCCI), Metropolitan Chamber of Commerce and Industries (MCC) and BUILD issued jointly.
Signed by the DCCI President, Shams Mahmud, MCCI President, Nihad Kabir and Chairman of BUIL, Abul Kashem Khan, the statement said externally, the COVID-19 pandemic has caused a supply-shock recession. The related uncertainty may slow the expansion of global value chains by at least 35%. Indeed, world trade is no longer expanding faster than world GDP.
It is clear that shrinking production at firms worldwide will create a recession unlike any we have seen. In outlooks for next year, the International Monetary Fund, the OECD, and other international organizations assumed a V-shaped recovery.
But this narrative was likely influenced by the rapid recovery of global value chains after the 2008-10 Great Recession, a downturn that originated in the financial system, not the real economy worldwide.
Given the importance of broken supply relationships in the current downturn, this recession is likely to be unique. The accompanying collapsed domestic consumer demand in OECD countries is already severely disrupting exports for Bangladesh.
The statement focused that in Bangladesh local businesses are now struggling to survive sales drops of 30-90%, after a 66 day nationwide shutdown. The majority of consumers faced with reduced income, unemployment and fear about their health and well-being have reacted by reducing consumption to mainly essentials such as food and medicines.
“Almost every sector of the economy from telecom to housing to transport to FMCG to transport have seen collapsing demand. In this situation what is most important is to find ways to resuscitate local demand and kick-start the economy. The Government through its budget must find ways to provide desperately needed liquidity and relief to as many business sectors of the economy as possible, throughout the whole economy, including domestic as well as export sectors”, it added.
In these circumstances, the only option for policymakers is to spur growth in as many sectors as possible, which is exactly what stimulus programs are designed to do. Prime Minister has recognized that instantly and her announcement of a series of such programmes was a welcome move in that direction.
Policy measure that can do good in these extraordinary times cannot be ignored for fear they may be abused. If they are abused, then the offenders can be prosecuted to the full extent of the law. But steps need to be taken now to infuse funds and demand into the system and revitalize the economy, through policy support and other measures.
There are specifically seven areas in this Budget which, they felt, will impede business going forward.
“They will increase the financial burdens on business, make doing business more difficult and expensive and also penalise compliant businesses. We urge the authorities concerned to review and rectify these measures in the interest of the continued economic growth of Bangladesh”, the statement added.