The increase in advance tax aiming to recover the revenue lost to VAT evasion could ultimately lead to consumer price hike and further inflationary pressure, said the experts.
They also said that Bangladesh needs to increase competitiveness and productivity to achieve economic diversification and higher economic and employment growth.
Moreover, tariff reductions would necessitate compensatory revenue reforms, including increased income tax and VAT revenue mobilisation.
They were speaking at an event titled 鈥楤udget Insights: Challenges and Opportunities Ahead,鈥� organised jointly by the Metropolitan Chamber of Commerce and Industry (MCCI) and the Policy Research Institute (PRI).
Zaidi Sattar, chairman of the PRI, presented the keynote at the event where he cautioned that the new fiscal measures could intensify inflationary pressures and burden consumers.
The government raised the VAT rate for commercial importers from 5 per cent to 7.5 per cent, while reducing the rate for industrial importers of raw materials from 3 per cent to 2 per cent in the national budget of financial year 2025-26, declared on June 2 and approved on Sunday.
Zaidi Sattar also said that budget deficits and deficit financing through bank borrowing and central bank money printing have expanded in the last 5-6 years.
That has led to jumps in inflation, also fueled by sharp exchange rate depreciation, he added.
He also urged that bank financing should be limited to no more than 1 per cent of GDP, with the rest of the deficit financed through foreign funding.
He also urged to reduce subsidies by eliminating subsidies on exports and remittances.聽
In his welcome speech, Kamran T Rahman, president of the MCCI, said that in response to the Finance Ordinance 2025, specific measures, such as a higher government borrowing target from the banking system, could lead to a crowding鈥憃ut effect, restricting private sector investment, and potentially intensify inflationary pressures that ultimately burden consumers.聽
Speaking as the chief guest, Anisuzzaman Chowdhury, special assistant to the chief adviser, said that although this is not a perfect budget, it can undoubtedly be called a business鈥慺riendly one.
He also said that due to reliance on foreign loans, external influences often shape the country's policy decisions.
鈥榃hile accepting foreign aid for development projects, the country must adhere to certain conditions, which ultimately hamper both revenue generation and foreign investment. We must work towards reducing dependence on foreign loans,鈥� he added.
He also stated that the budget was more transparent than those of previous years.
鈥楾he government discussed and took into account of the recommendations and demands from the think tank and businesses before formulating the budget,鈥� he added.
Bazlul Haque Khondker, research director of the PRI, and Adeeb H Khan, member of the MCCI, also presented other keynotes.