Excise duty on bank deposits will encourage capital flight, says FBCCI

The budget proposal to hike excise duty on bank account balance may encourage capital flight, the country's apex trade body has said in a statement.

The FY2018 budget proposes to increase excise duty to Tk 800 from Tk 500 on accounts with balance of Tk 100,000 or more.

Bank accounts with balance between Tk 1 million and Tk 10 million will be charged Tk 2,500 instead of Tk 1,500.

Accounts that have deposits between Tk 10 million and Tk 50 million will be charged Tk 12,000 instead of Tk 7,500.

The excise duty on accounts holding over Tk 50 million will be raised to Tk 25,000 from Tk 15,000 now. 

In a post-budget reaction on Saturday, the Federation of Bangladesh Chambers of Commerce and Industry said the excise duty should be completely removed.

"It will discourage people to keep their funds in banks. It can also take funds into informal sectors rather than banking channels," said FBCCI President Md Shafiul Islam Mohiuddin.

"Besides that, it's not appropriate to impose excise duty on non-hazardous products."

The top trade body lauded the budget proposal to cut the customs duty on imports of 34 raw materials and accessories required for assembling and manufacturing laptops, tablets and mobile handsets.

It, however, said doubling the duty on importing mobile handset to 10 percent, would increase illegal imports.

The FBCCI said the uniform 15 percent VAT would harm small and medium businesses and called on the government to reintroduce multiple rates of VAT.

It praised the proposal to extend VAT exemption for local manufacturers in certain cases, but demanded that English medium schools, courier services and manpower outsourcing firms be included.