The Metropolitan Chamber of Commerce and Industry (MCCI) Friday made a strong plea to the Finance Minister not to allow whitening of black money by paying 7.5% income tax.

In a post-budget reaction, the leading chamber said continuation of the scheme will encourage those who have a tendency to amass ill-gotten wealth and will act as a disincentive to the honest tax-payers.

"It will facilitate money laundering, which is under attack throughout the world. MCCI feels that continuation of the scheme will cause a setback to our international image," president of the chamber Kutubuddin Ahmed said.
The Finance Minister himself had publicly criticised the scheme earlier, the MCCI said.

It said the new budget has several welcome features. The provisions for creation of unemployment fund for monga-stricken and fully retarded people, increased provision for encouraging girls' education, fund for rehabilitation of retrenched and retired garments workers and increased honorarium for freedom fighters, etc. are indeed welcome.

MCCI, through its periodical economic reviews maintained in the recent months that the economy remains in growth path. However, to achieve a 6.0 per cent plus GDP growth rate will require mobilisation of resources and at the same time, policy support to the sectors which can contribute to the growth process, namely, the manufacturing and service sectors.

It said for the manufactur ing and service sectors, continuation of the tax holiday scheme for another three years is timely and welcome, particularly when the neighbouring countries have similar schemes. But the exclusion of some important sectors from tax holiday, such as, hospitals and telecommunication is ill-advised, the MCCI said.

Hospital and telecommunication as well as some other infrastructure related sectors should be included in the scheme, it said.

The decision to increase the tax rate for the non-listed companies will affect particularly the service sector, the MCCI said. It said listing of companies is done for several reasons and not for concessional tax rates only. Accordingly, when those measures are taken, companies will feel encouraged to list themselves, it added.
"We, therefore, strongly urge that the proposal for increased rate of tax on non-listed companies should be dropped," the MCCI said.

Equally important is the provision restricting allowable expenditures of insurance companies. It will seriously hurt the insurance industry.
The Chamber having examined the provision, strongly recommends that it should be withdrawn.

"We are happy that the Government has accepted our proposal with regard to the 3-tier customs duty structure but it did not accept the rates of customs duties we suggested for basic raw materials and intermediate products."

While the MCCI proposed 2.5% customs duty on basic raw materials, the government has proposed 7.5% and for intermediate products, instead of the Chamber's proposal for 7.5% duty, the Government has kept 15%.

The MCCI said if industrial sector has to maintain its competitiveness, the rates of customs duties ought to be reduced to 2.5% for raw materials and 7.5% for intermediate products.

Welcoming the budget's provision for duty exemption for raw materials and spare parts for export-oriented readymade garment industries, the MCCI said similar facilities ought to be given to other export oriented industries like leather, which has maximum value addition.

Leather industries having bonded warehouse facilities should, therefore, be given full exemption of duty on raw materials and spare parts, it maintained.
MCCI opposed reinstatement of the discretionary powers of the Income Tax and VAT Administration.

" We strongly reiterate that such discretionary powers ought to be withdrawn saving the tax-payers from harassment. We urge the Finance Minister to review the present discretionary powers and withdraw the same as soon as possible so as to eliminate the scope for victimisation of tax payers," the chamber said.
The MCCI expressed concern that the budget has provided for borrowing by the government from the banking sector by as much as Taka 36 billion, which may go up as it did during the current budget following non-realisation of the targeted revenue from taxes.

"In view of the liquidity crisis in the banks and the trade and industry's problem in getting credit facilities, we strongly urge the government to cut down borrowing from the banking sector," the chamber's statement added.

The MCCI hailed the doubling of the amount for providing a subsidy to the agriculture sector.