As the time draws closer for presentation of the national budget for fiscal 2011-11 to the Jatiya Sangsad (JS) or Parliament by Finance Minister A.MA Muhith, business bodies, trade organisations, professional groups and think-tanks are coming forward with their respective fiscal and other proposals and suggestions. In this context, the recommendations that were made public the other day by the Centre for Policy Dialogue (CPD), one of the country's leading think-tanks, merit attention. Among other suggestions, it has made strong pleas for imposing capital gains tax on individual accounts in the share market. This proposal has a strong rationale. There should be no reason for capital gainers in the market, out of their very short-term trading, from not parting with a reasonable or small part of their earnings as tax. The proposed tax can be collected automatically with every transaction made through the central depository system.
In this connection, one pertinent point for consideration -- about which the CPD's proposal to this effect has not stated anything -- is that the proposed capital gains tax should be deducted at source and the same should be considered as final settlement. That will make related tax administration easier and its payment relatively hassle-free. There should be no reason for anybody to consider the stock market as a tax haven. Those opening their beneficiary owners (BO) accounts should mention their tax identification number (TIN) for making transactions in the capital market. That will make it also easy to trace the amount of many flowing to the stock market. Also it would then lead to submission of the detailed holdings of shares of stocks at the close of every fiscal year in the wealth statements of individual investors. Many irregularities in trading and transactions by individuals, particularly the powerful ones, in the stock market can then be detected well, in the event of the circumstances demanding it. All such measures will help restore transparency in stock market-related transactions. The small investors have no reason to fear about such measures because the same will also be purported to safeguarding their interests as far as possible against any foul play by the manipulators.
Meanwhile, the proposal by the CPD as well as various industry groups for continuation of the tax holiday facility for some more years in case of 'deserving' industries, has also some strong and valid grounds for its incorporation in the forthcoming budget. Its context, however, needs to be examined rationally. Only deserving enterprises that have been showing promises should get this proposed facility while ones which are well-entrenched and unduly profiting from all types of cushions, should be excluded from its benefits. This is more so because it was earlier found that the scheme was largely abused or misused by a section of unscrupulous businesses.
Furthermore, the recommendations of the CPD for exempting basic foods from duties and taxes as a short-term measure, merit a dispassionate consideration. In this context, the proposals have been made for zero tariff on imports of rice, wheat and lentils and also for scaling down the Value Added Tax (VAT) on refined and crude edible oils from the present 10 per cent to nil. Clearly, such suggestions are purported to making food prices bearable for the common man and helping to rein in the inflation associated with high costs of basic food items. While such measures can be considered as a short-term action in the context of the prevailing price situation, the medium- and the long-term answer to the problem does certainly lie in boosting production and augmenting supplies.
Meanwhile, the proposal of the CPD and some other bodies for full activation of the state-owned Trading Corporation of Bangladesh (TCB) deserves a critical scrutiny. The main point for consideration here is whether the TCB will be organizationally capable of importing essential goods at competitive prices while ensuring quality, with its operations remaining untainted by corruption, irregularities and influence of the favour-seekers who exercise clout under any given political power matrix. Also the TCB's distribution arrangements have not been free from unfair practices and rent-seeking activities. Hence, the proposal for full activation of the TCB needs an objective and critical review.
In this connection, one pertinent point for consideration -- about which the CPD's proposal to this effect has not stated anything -- is that the proposed capital gains tax should be deducted at source and the same should be considered as final settlement. That will make related tax administration easier and its payment relatively hassle-free. There should be no reason for anybody to consider the stock market as a tax haven. Those opening their beneficiary owners (BO) accounts should mention their tax identification number (TIN) for making transactions in the capital market. That will make it also easy to trace the amount of many flowing to the stock market. Also it would then lead to submission of the detailed holdings of shares of stocks at the close of every fiscal year in the wealth statements of individual investors. Many irregularities in trading and transactions by individuals, particularly the powerful ones, in the stock market can then be detected well, in the event of the circumstances demanding it. All such measures will help restore transparency in stock market-related transactions. The small investors have no reason to fear about such measures because the same will also be purported to safeguarding their interests as far as possible against any foul play by the manipulators.
Meanwhile, the proposal by the CPD as well as various industry groups for continuation of the tax holiday facility for some more years in case of 'deserving' industries, has also some strong and valid grounds for its incorporation in the forthcoming budget. Its context, however, needs to be examined rationally. Only deserving enterprises that have been showing promises should get this proposed facility while ones which are well-entrenched and unduly profiting from all types of cushions, should be excluded from its benefits. This is more so because it was earlier found that the scheme was largely abused or misused by a section of unscrupulous businesses.
Furthermore, the recommendations of the CPD for exempting basic foods from duties and taxes as a short-term measure, merit a dispassionate consideration. In this context, the proposals have been made for zero tariff on imports of rice, wheat and lentils and also for scaling down the Value Added Tax (VAT) on refined and crude edible oils from the present 10 per cent to nil. Clearly, such suggestions are purported to making food prices bearable for the common man and helping to rein in the inflation associated with high costs of basic food items. While such measures can be considered as a short-term action in the context of the prevailing price situation, the medium- and the long-term answer to the problem does certainly lie in boosting production and augmenting supplies.
Meanwhile, the proposal of the CPD and some other bodies for full activation of the state-owned Trading Corporation of Bangladesh (TCB) deserves a critical scrutiny. The main point for consideration here is whether the TCB will be organizationally capable of importing essential goods at competitive prices while ensuring quality, with its operations remaining untainted by corruption, irregularities and influence of the favour-seekers who exercise clout under any given political power matrix. Also the TCB's distribution arrangements have not been free from unfair practices and rent-seeking activities. Hence, the proposal for full activation of the TCB needs an objective and critical review.
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