Bangladesh's largest-ever budget unveiled to walk the extra mile
Revenue generation target set at Tk 2,87,990 cr; deficit Tk 1,12,276cr
01 Jun 2017, 22:31
Parliament: Finance Minister AMA Muhith on Thursday unveiled a Tk 4,00,226 crore ambitious budget for the next fiscal year (2017-18) with a growth target of 7.4 percent, expecting to open up a new horizon for Bangladesh through some initiatives ahead of the next general election.
"Our never-ending march on the development highway will continue until we reach our final destination. The time is ours, the time is for
Bangladesh," Muhith said while placing the country's largest ever and the last full budget of the current Awami League government.
This was Muhith's 11th budget and the ninth in a row in the House, which he began unveiling around 1:45pm in almost full attendance of the parliament members, including Leader of the House and Prime Minister Sheikh Hasina.
The veteran minister said the GDP growth rate will be 7.4 percent in FY 2017-18 while the inflation to come down to 5.5 percent by the end of the fiscal year. Besides, interest rates will fall gradually while nominal exchange rate to remain stable.
Despite widespread concerns from the business community, Muhith proposed that the uniform VAT will be 15 percent over the next three years.
"First of all, I would like to say that VAT will be applicable at a single and uniform rate. This rate will be 15 percent which will be unchanged over the next three years," he said in his budget speech.
Muhith did not budge on the plan of keeping 15 percent uniform VAT in the next fiscal though he recently said the government was considering reduction of the rate.
He also said, "I think, I'll be able to satisfy the business community by increasing the existing turnover tax and VAT exemption threshold."
In his 108-page budget speech, the Finance Minister said, "I'm placing this budget at a historic juncture of our economic development. This is the last full budget of our current tenure. With the general election scheduled to be held in FY 2018-19, the next budget will have few initiatives or prospects for opening new horizons."
Under the title 'Bangladesh on Development Highway: The Time is Ours', the Finance Minister in his budget speech said the consistent implementation of the government's plans and development strategies in the following nine years in office have brought to the current state of success.
"Time has arrived for all to march ahead by coming together burying all differences and shunning the path of envy and violence. Let's now prepare for a prosperous, happy and peaceful Bangladesh of 2041," he said.
The major attention this time has been attached to power, education and ICT sectors.
According to the allocation in the proposed budget, 29.31 percent of the total outlay has been allocated to social infrastructure sector, of which 26.12 percent has been proposed for the human resource sub-sector (education, health and other related sectors); 31.74 percent of the total allocation has been proposed for the physical infrastructure sector, of which 13.02 percent will go to the overall agriculture and rural development, 11.88 percent to overall communication and 5.28 percent to power and energy sector.
He said about 24.03 percent of the total allocation has been proposed for the general services sector. Besides, 1.88 percent has been allocated for public private partnership (PPP), financial assistance for various industries, subsidies and equity investment in state-owned banks, and financial institutions; 10.36 percent for interest repayment; and the rest 2.68 percent for net lending and miscellaneous expenditure.
The size of Annual Development Programme (ADP) has been set at Tk 1,53,331 crore. The revenue generation target has been set at Tk 2,87,990 crore leaving a deficit of Tk 1,12,276 crore.
The National Board of Revenue (NBR) will generate Tk 2,48,190 crore of the targeted amount. The target of Non-NBR tax revenue collection has been fixed at Tk 8,662 crore.
The target of non-tax revenue collection has been set at Tk 31,179 crore.
To make up the financing according to Muhith's plan, the government wants to source Tk 32,149 crore from non-bank borrowing, Tk 28,203 crore from the banking system and Tk 30,150 crore from the national savings schemes.
This time around, the key challenge would be the financing of this budget with the remittance inflow - a major revenue source of Bangladesh - sliding throughout the past year.
The Finance Minister also proposed to keep unchanged the tax-exempted income-threshold for individual tax payers at Tk 2.50 lakh.
Muhith also proposed tax exemption threshold for women and senior citizens, aged over 65 years, to be kept at Tk 3 lakh, person with disability at Tk 4 lakh and war-wounded gazetted freedom fighters at Tk 4.25 lakh.
Meanwhile, taxpayers with an income above Tk 2.5 lakh to Tk 4 lakh annually will be taxed 10 percent of their income, Tk 5 lakh and above taxed 15 percent, Tk 6 lakh and above taxed 20 percent and Tk 30 lakh and above 25 percent of their income.
He also proposed to keep unchanged the existing tax rate for publicly traded companies at 25 percent and for non-publicly traded companies at 35 percent. "The difference in tax rates should be maintained for encouraging the companies to be listed with the stock exchanges," Muhith said in his speech.
About pension, he said the government pensioners are but a small fragment of the entire population of the country. "That's why we're working towards introducing a participatory universal pension system for all under the government support. The underlying goal of all these activities is to transform Bangladesh into a welfare state."
He also proposed to increase the VAT-free turnover ceiling to Tk 36 lakh from Tk 30 lakh in the 'VAT and Supplementary Duty Act 2012', which is scheduled to be implemented from July 1.
"Besides, according to the desire of the business community, I'm proposing before this august Parliament to raise threshold for registration under VAT from Tk 80 Lakh to 1 crore 50 Lakh," he said in his budget speech.
The Finance Minister also proposed to maintain minimum surcharge of Tk 3000 if the net wealth exceeds Taka 2 crore and 25 lakh.
Since cigarettes, bidi and other tobacco products are injurious to
Health, Muhith also proposed to impose a surcharge of 2.5 percent on the income from the business of producing cigarette, bidi, zarda, gul and other tobacco items
Considering that the RMG sector is playing a vital role in the economic development and employment generation of the country, he proposed to reduce the corporate tax rate to 15 percent for this sector.
Due to the changes in duties on different products, the prices of solar panel, foreign made mobile set, memory card, travel tax, all kinds of spices, cosmetics, fast food, bidi, and cigarette would go up.
On the other hand, the prices of locally made refrigerator, air conditioner, LPG gas cylinder, computer raw materials, locally assembled motorcycles and mobile sets, hybrid motor cars, fertiliser, seeds, pesticide, salt, fish/meat, rice, sugar, palm oil, soya bean oil, crashed rice, vegetables, and maize would go down.