Finance Minister AMA Muhith’s last budget for the fiscal year 2018-19, placed before parliament on Thursday, ahead of the general elections, has offered a number of benefits for the high and low income people, but little relief to the middle and lower-middle class.
In his budget speech the finance minister proposed additional taxes on a number of essential commodities, mainly consumed by the middle-income bracket.
Muhith has not given any relief to the middle income bracket. He has not increased the tax-free income ceiling, but has raised the tax ceiling on pleasure expenditure to Tk5.50 from Tk4.75 lakh.
He further proposed various types of taxes on furniture, cosmetics, clothes, imported mobile phones, reconditioned cars, energy drinks, toiletries, filament lamps, used apartments, E-hailing services, virtual businesses, bicycles, mobile battery chargers, UPS/IPS, automatic circuit breakers, and chewing tobacco—commodities mostly used by the middle class.
According to Centre for Policy Dialogue (CPD) Distinguished Fellow Debapriya Bhattacharya, the government does not feel the need to hear the voices of the middle and the lower middle-income class. They have paid attention to the poor for vote and affluent class for election finance, considering the upcoming election.
The government has also set the revenue target for the upcoming fiscal year mainly betting on indirect tax, which is mostly paid by the middle income people.
Income tax in the budget has increased only slightly from 21.78% to 21.99%, while the target from value-added tax (VAT) has been estimated at 23.79% from 21.91% a year ago.
As the middle and lower middle-income people have a very close relation with the market, the dependency on VAT will surely create a pressure on the pockets of these people.