Amid the business community’s concern about possible imposition of 15 percent flat VAT rate from July 1 next, Finance Minister AMA Muhith is going to place in Parliament on Thursday a possible Tk 400,266 crore national budget for the next fiscal year (FY18) targeting a 7.4 percent GDP rate.
The Finance Minister will start placing the budget in the House from 1:30 pm.
The veteran minister’s 9th consecutive budget will focus mainly on speeding up the implementation of some mega infrastructure projects and boosting private investment to create more employment opportunities.
Officials at the Finance Ministry said the possible budget size of Tk 400,266 crore for the next fiscal year is Tk 54,665 crore or 17 percent higher than the original budget size of the outgoing fiscal year, while about Tk 83,0096 crore or about 26 percent higher than the revised budget outlay of the outgoing fiscal year.
The overall budget also includes a Tk 153,331 crore Annual Development Programme (ADP) while the rest will be for the non-development expenditure.
The salaries and allowances of government servants, interest payment and subsidies will account for over half of the non-development expenditure.
The new budget will be the country’s 46th national one and the 18th of the Awami League government while Muhith’s 11th.
Muhith also placed two national budgets during HM Ershad’s regime in the early 80s.
The centre of attraction or concern in this upcoming budget is the possible imposition of flat 15 percent VAT rate which will come into effect on July 1.
But, officials at the Finance Ministry informed this correspondent that the VAT rate might be slashed by 1 percent at the last moment which could be finalised at the Cabinet meeting before placing the budget.
Towards implementing the huge budget, the mammoth challenge for the Finance Minister will be to source the additional revenue to meet the budget expenditures.
For this, the veteran minister will rely on expanding the scope of VAT, an indirect form of taxation that has direct impact on the life and livelihood of every consumer.
Traders, businesspeople and the public are equally worried about the possible aftermath of imposing a 15 percent flat value added tax (VAT) for all.
To remove the VAT fear, Muhith as well as NBR officials said they will exempt many products used by the poorer section of people from the VAT net.
The Finance Minister also assured that they identified several goods for imposing supplementary duty on so that the local industries are not affected.
At the moment, out of 8 lakh business firms, only 32,000 pay VAT. The government plans to increase the number to 50,000.
Talking to reporters a few days back at his Secretariat office, Muhith said like previous years, the education and health sectors will continue to get priority while the transport, power and energy sectors get comparatively higher allocation.
According to the officials at the Finance Ministry, the overall revenue collection target for the next fiscal year is likely to be set at Tk 288,066 crore of which Tk 248,000 crore is likely to come from the NBR sources.
The target for containing inflation in the next fiscal year has been set at 5.5 percent.
The Finance Ministry officials said to generate more employment opportunities through raising investments, the next budget is also likely to see more expenditures for which the overall budget deficit will be around Tk 112,266 crore, over 5 percent of GDP.
The original budget outlay for the outgoing fiscal year was earlier set at Tk 340,000 crore which was later revised at Tk 317,174 crore.
Out of the original ADP allocation of Tk 153,331 crore in the next fiscal year, Tk 96,331 crore will come from the local sources while the rest Tk 57,000 crore from the foreign sources.
The next budget is also likely to witness a Tk 2,000-crore allocation against the Public Private Partnership (PPP) initiatives to encourage more private sector investments and participation side by side larger allocations will be there in the priority fast track projects to further expedite the pace of GDP growth.
Out of Tk 153,331 crore ADP outlay slated for the fiscal year 2017-18, a hefty Tk 30,614 crore is set aside for the six fast-track projects — Padma Bridge, Padma Rail Link, Metro Rail, Dohazari-Cox’s Bazar-Gundum Rail Project, Matarbari Coal-fired Power Plant and Rooppur Nuclear Power Plant.
The tax-free income is also expected to go up slightly. But, wealth surcharge is being increased in every ceiling as the Finance Minister has already hinted at his plan to tax the rich more.
In his budget speech, Muhith will highlight the present government’s successes in meeting the energy crisis when GDP growth met target, inflation was also kept under control, and the country saw significant improvement of various administrative and financial services in the past one year, thanks to digitisation programme and political stability.
Like previous year, the Finance Minister will present the budget through PowerPoint which will be made available on the website of the Finance Division –www.mof.gov.bd.
The budget documents will also be available on www.bangladesh.gov.bd, www.nbr-bd.org, www.plancomm.gov.bd, www.imed.gov.bd, www.bdpressinform.org and www.pmo.gov.bd.
Any person or organisation at home and abroad can send feedback, opinion or recommendation by filling up a form after downloading it from the websites.
Meanwhile, the Finance Minister will address a post-budget press conference at the Osmani Memorial Auditorium at 3pm on Friday.