Prof. Abu Ahmed, Economics Department, Dhaka University : Priority should be given to reduce corporate income tax in the upcoming budget for the sake of developing the share market. I hope that the tax would be further reduced for the benefit of listed companies.
I am talking about tax deduction for the small investors in the stock market for some discount on their dividend income. Dividend income is now fully taxable. If the government could provide some relief in that respect, it could if it wanted to, then it should reduce the tax, even though it is totally up to the government. For companies listed in the stock market, reducing the corporate income tax would bolster their ability to pay dividends, which would encourage more companies to become listed.
But they are not getting listed now and reducing the dividend income tax on small investors would further encourage more to invest in the stock market because there is prospect for getting tax relief. Currently there is no tax relief and everyone has to pay the tax. In the current system, the full tax has to be paid by presenting the income tax after getting dividend from the company.
It is not possible to revitalize the stock market by flooding it with investment. We have to refrain from that habit and get back to doing real work. Relief must be provided if competent companies are to be listed. Otherwise, companies would have no incentive of joining the stock market. They have to present a lot of information if they choose to enter – quarterly, annual reports, AGMs. Companies do not want to get into such hassle. Only if they get tax relief would they change their minds. Because of this, there has not been a single good company entering the stock market in the last five-to-seven years. Incepta is the second largest company in the country in the pharmaceutical sector. Yet they still haven’t entered the stock market. We buy Lux soaps but Lever Brothers have neither entered. A lot of us are Banglalink customers but why is Banglalink not listed in the stock market? If we ask the companies, they reply it is not feasible. To make it feasible, the corporate tax has to be reduced.
Based on an interview by Ashiq Rahman, translated by Abrar Hussain