Cash aid is needed more than tax cuts
I congratulate the government on announcing a 10-year tax holiday in agriculture, light engineering and technology in the budget of 2021-22. Besides, we demand to intensify the incentive activities for small entrepreneurs.
The banks did not provide any of the Tk20,000-crore stimulus announced by the government for cottages, micro and small entrepreneurs (CMSE).They say that 75% of the incentives in this sector have been distributed, but the fact is the whole of it has been provided to medium entrepreneurs.
Businessmen who are in a relatively good position have taken loans from the CMSE package to buy houses and cars due to good relations with banks.
The government has given some concessions in turnover tax and VAT but this benefit can be obtained only if you can run the business and sell products. So, at first small entrepreneurs must receive the amount to keep the business running.
Taxes in a handful of sectors are not enough to increase investment. In the context of Covid-19, VAT should be waived for the SME sector for next year. Besides, the amount of other taxes should also be reduced.
Entrepreneurs will be able to sell products at lower prices as the VAT rate will be reduced, which will increase the domestic demand and play an effective role in the overall recovery of the economy.
There is not much for new entrepreneurs in the budget. To encourage them, the scope of Bangladesh Bank's refinancing scheme should be increased and emphasis should be laid on its implementation.
Even if the banks know about these schemes, they do not want to provide loans. The government has to take initiative in this regard. Banks, as well as business organisations, need to be involved in the distribution process.
In the current context, financial assistance is needed more than tax exemption. Along with this, we have to come forward with policy support. Workers need to increase their skills. They need to be trained. The skills of the manpower coming to the market also need to be increased. Specific initiatives in this regard should be kept in the budget.
Mirza Nurul Ghani Shovon is the president of the National Association of Small & Cottage Industries of Bangladesh (Nascib)
