President of President Federation of Bangladesh Chamber of Commerce and Industry (FBCCI) Mahbubul Alam has called for shunning the politics of blockades and hartals saying that a day of such protests cost the economy up to Tk6500 crore.

Talking to UNB this week Alam said, “We want change in government through fair elections. A strike or blockade causes a loss of Tk6500 crore a day. So we want political stability in the country.”

“We do not want a strike or blockade. Strikes or blockades are very harmful to the economy. We are very concerned about this,” he pointed out.

The FBCCI chief said these types of political activities are also causing violence on the highways, which is giving the wrong message to foreign buyers and investors.

He said people are buying goods at higher prices as the supply line is disrupted and transport fares hiked due to the political unrest.

The traders are not getting their pre-booked product in time as the vehicle movements on the highways are affected by political programmes. There is a panic among the suppliers and goods producers, he said.

The industrial sector is facing disruption in production as the supply of raw materials is being hampered for hartal (general strike) and blockade. If such a situation continues, many factories will shut down, he feared.

Alam said that Bangladesh Bank has to make dollar supply available for LC opening to import enough consumer items to keep the market stable during the upcoming Ramadan.

He said the businesses are facing difficulty in LC opening for the dollar shortage. To overcome the situation he suggested the central bank stops import of luxury and unnecessary goods, and give priority in importing industrial raw materials and consumer goods up to Ramadan.

After Covid-19 pandemic and the effect of rising fuel prices due to the Russia-Ukraine war, the entrepreneurs are not able to bear the losses caused by political violence, he said.

The political parties must accept that without stability economic growth is impossible and the welfare of people will not come with lower economic growth, he said.

Bangladesh is an emerging economy, and private sector entrepreneurs have set up several industrial units here with big efforts, he said.

The destructive activities in the domestic arena will provide a negative signal to the foreign buyers, said the FBCCI chief.

In that case the export earnings might be affected, which is essential for the survival of the industrial sector as well as employment of youth, he said.

So both the government and opposition parties should discuss political issues and set alternative programmes instead of hartal and blockade, he opined.

MSH

Companies and organisations will be required to file tax returns on the income generated by employee welfare funds from the current fiscal year and pay a 27.5 percent tax on the earnings. 

The Income Tax Act 2023 incorporates the provision, lifting the tax exemption and amnesty on the compulsion to file returns for funds such as provident funds, gratuity funds and workers' profit participation funds maintained by the private sector.

The law, however, has exempted government-managed provident funds from taxation, raising questions.

TIM Nurul Kabir, executive director of the Foreign Investors' Chamber of Commerce & Industry, said there were many other avenues to collect tax.

"Employees benefit from provident funds after their retirement. So, the authority should not slap taxes on retirement benefit."

He said while levying the tax, the government has not treated provident funds of the private and public sectors equally.

"It is discriminatory," he said, adding that they would appeal to the tax authority for the withdrawal of the tax on income from provident funds.

Debabrata Roy Chowdhury, director for legal, regulatory and corporate affairs at Nestlé Bangladesh PLC, said the introduction of income tax on trust funds would lower the overall income from such schemes.

"This will have an adverse long-term impact on retired employees of private organisations."

Chowdhury urged the authority to address the issue in line with the spirit of the government's initiatives aimed at ensuring social security for private sector employees.

"The recent introduction of the universal pension scheme for private sector employees is a good example of that."

A senior official of the NBR, on condition of anonymity, said the income of government-managed provident funds was exempted in line with the Provident Fund Act 1925.

He said provident funds under the private sector had been historically exempted and there was no requirement to submit tax returns. As a result, it was unclear whether the funds were properly utilised.

"From now onwards, we will see proper disclosure."

The tax official said the contribution of payroll tax is about 3 percent of the total income tax although it should increase as the economy is growing.

Md Shahadat Hossain, a former president of the Institute of Chartered Accountants of Bangladesh, said income from investment in savings certificates, where people invest as a source of future earnings, is already taxed.

"From that perspective, the imposition of tax on provident and other employee welfare funds seems okay."

However, Towfiqul Islam Khan, senior research fellow at the Centre for Policy Dialogue, said social protection for private sector employees was low.

"Provident and other workers' welfare-related funds provide little social protection. The imposition of tax will increase inequality. But there can't be any discrimination in taxation between private and government provident funds."

Khan, citing the latest income tax law that replaced the Income Tax Ordinance 1984, said the NBR tried to find new avenues to increase tax collection and improve the nation's revenue-gross domestic product ratio, which is one of the lowest in the world.

"We can see the desperation of the tax authority to boost collection. This ultimately reveals the inability of the NBR to catch the tax evaders and illicit money makers."