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What are the expectations from the new budget?

  • Published at 01:38 am June 6th, 2018
Photo:Syed Zakir Hossain/Dhaka Tribune

Finance Minister AMA Muhith is scheduled to place the budget proposal at parliament tomorrow, at a time when the economy is suffering with high interest rates on bank loans, depreciation of taka against foreign currencies, rising inflation and poor business climate.

Over the past few months, stakeholders from trade bodies in different sectors as well as economists have put forth several proposals and recommendations for the Ministry of Finance to accommodate in the new budget to make the budget people-and investment-friendly.

During the pre-budget discussions, economists expressed their concern about the country’s struggling banking sector, rising inflation rate, and high prices of essentials compared to international prices. Business bodies also sought special attention to the banking sector, focusing on lowering the existing credit interest rates.

Economists have taken a proactive approach to ensure people’s demands, increase investment and generate more jobs, aiming to create a smooth path for the country towards becoming a developing nation.

The demands from the business community, on the other hand, are mostly focused on protecting the local industries by revising corporate tax, customs duty and value-added tax (VAT) rates in order to encourage more investment.

The Dhaka Tribune presents a comprehensive list of the recommendations made by the economists as well trade bodies that they expect to see in the proposed national budget of 2018-19 fiscal year.

Recommendations by economists

  • Restrain vested interest groups while formulating national economic policies
  • Stop practice of recapitalizing state-owned banks
  • Do not leave scope to “whiten black money”
  • Prioritize timely implementation of ADP projects
  • Raise revenue from niche areas, including due taxes from state-owned enterprises
  • Raise tax-free income ceiling to Tk3 lakh
  • Reduce first slab for personal income tax rate to 7.5% from existing 10%
  • Refrain from reducing corporate tax rate on ad-hoc basis. If required, it should be done in a staggered way
  • Increase resource allocation for education, health and social security to 2.8%, 1.1%, and 1.6% of GDP, respectively
  • Make transparent budgetary implications for Rohingya management

Demands by trade bodies 

  • Raise the ceiling on tax-free income
  • Reduce corporate tax in all categories
  • Withdraw advance income tax on import of raw materials
  • Withdraw multilayer taxation on dividend income, and VAT on trade licence and import and export permits
  • Conduct pilot survey to identify taxable people
  • Introduce various categories of tax cards
  • Introduce tax exemption on the prices of electronic devices up to Tk25,000
  • Restore untaxed money legalization provision under the income tax law with indemnity for real estate sector
  • Form two joint committees to check misdeclaration including under-invoicing, and to finalize the proposed VAT rules
  • Raise ceiling on tax exemption on children’s education to Tk1.2 lakh