The government has unveiled the proposed national budget for the next fiscal year, beginning on July 1, with an outlay of Tk 5.23 trillion (523,190 crore), giving maximum focus on infrastructure development.The figure is 12.62 percent higher than the current FY's original budget and 18.22 percent bigger than the revised budget.
Finance Minister AHM Mustafa Kamal placed the budget in Parliament yesterday - the first annual spending and revenue earning plan of the Awami League government after it assumed office through the Dec 30, 2018 general election.
In the budget for 2019-20 FY, the total revenue collection has been estimated at Tk 3.78 trillion of which Tk 3.26 trillion will be collected through the National Board of Revenue (NBR).
Tax revenue from non-NBR sources has been estimated at Tk 145 billion (14,500 crore) and non-tax revenue at Tk 377 billion. The overall budget deficit will be Tk 1.45 trillion.
The new budget is 18.1 per cent of the country's gross domestic product (GDP) while the deficit is 27.8 percent of the expenditure layout and 5 per cent of the GDP.
The government estimates that Tk 680 billion will come from external sources and Tk 774 billion from domestic sources for financing the deficit.
Economists called the budget growth-friendly but unrealistic with ambitious goals. Opposition political parties rejected the budget as anti-people while the ruling party welcomed it as 'realistic' and 'pro-people'.The budget targets to keep the average inflation rate at 5.5 percent with a view to keeping commodity prices under control and projects an 8.2 percent GDP growth in the next FY.
"We have not included any component in the budget of FY2019-20 that may cause a price spiral for essential commodities," the finance minister said while presenting his maiden budget.
About the GDP growth, he said: "We expect a GDP growth of 8.13 percent in FY2018-19. Our commitment is to achieve a growth rate of 10 percent by FY2023-24, and maintain that rate until 2041 so that we can lay a solid foundation for becoming a high income country by that time."
"To achieve this objective, GDP growth rate has been projected at 8.2 percent for FY2019-20." The budget, titled "Bangladesh on a Pathway to Prosperity Time is Ours, Time for Bangladesh", has largely focused on infrastructure development and proposed scaling up social safety net.
It has proposed highest 15.2 percent resource allocation for education and technology, 12.2 percent for transport and communications, 10.9 percent for debt servicing, and 7.2 percent for local government and rural development.
The allocation for other fields include 6.4 percent for subsidies and incentives, 5.6 percent for defense, 5.4 percent for energy and power, 5.2 percent for pension, 5.1 percent for public order and security, 4.9 percent for social security and health each, and 4.6 percent for public administration.
Mustafa Kamal has proposed keeping tax-free income limit for individuals and corporate tax rates unchanged in the budget but said all eligible taxpayers will be brought under the tax net in future.He said general tax exemption threshold for income tax will remain Tk 250,000 like the last few years while the ceiling has been Tk 300,000 for female taxpayers.
Referring to the low tax-GDP ratio in Bangladesh, he said: "From now on, we are determined to raise the ratio from its current 10 percent to 14 percent in next two years." "A culture has been established in our revenue domain for a long time; that is, those who pay taxes to the government, only continue to do so every year," he added.
"Others, despite having taxable income, continue to evade payment of taxes. We also want to get out of this bad culture. All eligible taxpayers will be brought under the tax net." One of the main features of the new budget is the inclusion of a plan for pension for all employed citizens in both formal and informal sectors.The minister said a "Universal Pension Authority" will be formed soon for introducing pension for everyone including all employed citizens.
The proposed budget has proposed bringing more people under the social safety net as pledged by the ruling party in the election manifesto.The finance minister presented a set of proposals to widen the safety net program in the next FY, including a rise in the state honorarium for the freedom fighters to Tk 12,000 from Tk 10,000.
He said the number of elderly allowance recipients will be increased from 4 million to 4.4 million while the number of recipients of allowances for widows and victims of domestic violence will be raised to 1.7 million from 1.4 million.Kamal announced that the long-awaited Value Added Tax Act, 2012 will come into effect in the 2019-20 FY.
A joint working group, comprising officials from the government and the private sector, will oversee the implementation of the new law, he said.In the new budget, the government has kept the scope of whitening black money through investment in the real estate sector and offered new avenues for legalizing such money through investment in economic zones and high-tech parks.
The finance minister proposed an amendment to the income tax law under which investment into economic zones and high-tech parks will no longer be subjected to government scrutiny.According to the proposal, a taxpayer can avail himself of the exemption after paying 10 percent income tax on such investments. Kamal said the move aims to generate income through the production of goods and services in these areas by boosting investment and creating jobs.
The minister has proposed imposition of 15 percent tax on stock dividends for the new fiscal year.He said: "We observed that the companies are generally distributing stock dividends instead of cash dividends. As a result, investors are deprived of their well-deserved return."Kamal observed that cash dividend plays an important role in increasing the value of the share and also strengthening the share market.
In an instant reaction, Centre for Policy Dialogue distinguished fellow Debapriya Bhattacharya said the budget has not fully reflected the reality though the finance minister has tried to formulate it in light of the reality.Bangladesh Institute of Development Studies (BIDS) director general KAS Murshid said the overall stance of the budget remains pro-growth, which is very important to maintain.
Calling the budget as anti-people, senior BNP leader Amir Khasru Mahmud Chowdhury said the huge deficit the government has projected in outlay will be realized from people anyhow."We, the people will be sufferer to meet the budget deficit. The government will make up the deficit by collecting money either through hiking gas or electricity prices," he said in an instant budget reaction.
The ruling Awami League leader, however, said the new budget is not burdened with debts. "It's people-oriented, realistic," he said in an instant reaction to the budget.The former commerce minister said the budget will play a key role in economic development of the people and will continue on the successes of the past year.
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