Terming the proposed budget for the 2006-07 fiscal 'static', the country's premier bourse yesterday said the government did not provide any incentive or package for the capital market.

"The proposed budget is static or maintains status quo and there is no new package for the capital market except a tax rebate against investment up to Tk 2.5 lakh irrespective of share purchase of a company," said Salahuddin Ahmed Khan, chief executive officer (CEO) of Dhaka Stock Exchange (DSE).

"Before the budget we have made many demands... but none of our demands is met in the budget. However, we are happy as the government did not cut back any of our existing incentives in the new budget," he said addressing a post-budget press conference in Dhaka.

DSE President Abdullah Bokhari said the government maintains status quo in the proposed budget, as it has only three months left of its five years tenure.

Noting that a Tk17,000 crore budget deficit and government's future dependence on domestic borrowing, the DSE urged the government to collect the revenue from the secondary market.

"The dependence on domestic borrowing may create indiscipline in the financial market. To avoid such an indiscipline, the government can collect money from the secondary market through issuance of bonds and offload of state-owned companies' shares," the DSE CEO said.

He said the government introduced minimum income tax of Tk5000 or 0.50 per cent of turnover, whichever higher, for companies irrespective of profit or loss. "Such levy violates the basic principle of income tax," Khan remarked.
He said as expected the government tried to lower the import tax and supplementary duties as per the World Bank prescription. However, there is a good attempt to support the local industries, he said, adding that prices of some finished goods would come down due to reduction in such taxes.

"Besides, there is a good attempt to bring transparency in corporate spending. Fictitious expenditure for wages and investment will be difficult, as they are now required to be made using banking channel," he added.

DSE Senior Vice President Ahmad Rashid Lali, Vice President NUM Oliullah and directors Sharif Ataur Rahman, Shakil Rizvi, Shahed Abdul Khaleque and Azizul Haque were also present at the press conference.

Source: The Daily Star, June 11, 2006