The Federation of Bangladesh Chambers of Commerce and Industry (FBCCI) has called for capping the highest personal income tax rate at 25 per cent, instead of a proposed increase to 35 per cent in 2028 from the current 30 per cent, arguing that a lower top slab would ease pressure on taxpayers and support economic activity.
The apex business body, in its reaction to the proposed national budget, welcomed the increase in the tax-free income threshold by Tk25,000 to Tk3.75 lakh, but said further adjustment is needed to reflect inflationary pressure on real incomes, particularly for low and middle-income groups.
Restoration of the 5 per cent tax slab has been recommended, with the body arguing that its continuation would help reduce the burden on marginal taxpayers amid sustained price pressures.
A large number of marginal taxpayers were paying only 5 per cent tax on the income just above the threshold, and the budget proposal removing the slab will increase their tax burden by up to Tk5,000 a year.
On business taxation, FBCCI urged cutting turnover tax to 0.5 per cent from 1 per cent to reduce costs, alongside a 250 basis point reduction in corporate tax to 25 per cent to improve competitiveness and investment conditions.
According to FBCCI, the Tk9.38 lakh crore budget reflects economic ambition under challenging geopolitical and domestic conditions, but outcomes will depend on execution capacity rather than policy intent.
The budget prioritises economic stability, investment, production and employment generation alongside allocations for education, health, social protection, financial stability, energy security and ICT, aiming to balance growth and welfare objectives.
A 3R strategy—recovery, restoration and reconstruction—has been adopted to stabilise the economy and support private sector-led recovery by restoring investor confidence, FBCCI noted.
However, achieving the Tk6.95 lakh crore revenue target, equivalent to 10.2 per cent of GDP, would be difficult under current conditions and weak revenue mobilisation, raising risks if reforms are delayed.
Structural reform of the National Board of Revenue was described as essential to improve revenue management, strengthen economic stability and create a more investment-friendly tax environment.
The Tk2.43 lakh crore budget deficit, or 3.6 per cent of GDP, was flagged as another pressure point, with financing needs from both domestic and external sources remaining high and potentially limiting fiscal flexibility.
Continued reliance on banking sector borrowing could crowd out private credit, slowing investment and job creation, the trade body cautioned.
Inflation, low tax-GDP ratio, rising non-performing loans, external debt pressure and global geopolitical instability were identified as key risks to budget execution and macroeconomic stability.
Effective implementation of reforms will determine the budget’s success in translating policy plans into measurable economic outcomes, it said.
Expansion of investment-friendly economic zones, export diversification and development of IT and electronics human resources were highlighted as necessary for strengthening long-term competitiveness.
It also urged strengthening equity and bond markets and improving the execution quality of the annual development programme with stronger accountability.
Uninterrupted energy supply, efficient logistics and supply chains and establishment of a complete legal framework for free trade zones alongside capturing blue economy potential were further emphasised as structural requirements for trade expansion.
These priorities, FBCCI said, are essential to achieving the budget’s broader economic objectives under prevailing domestic and global constraints.
