Finance Minister Muhith set to present his ‘best ever’ budget

The Tk 4 trillion-budget for fiscal 2017-18 to be unveiled on Jun 1 will be his best yet, Finance Minister AMA Muhith said.

“This year, it is going to be the best budget I have ever given. It will not be just an outlay of incomes and spending,” he told bdnews24.com ahead of placing the proposed budget in parliament on Thursday.

The upcoming budget, which will be Muhith’s 11th, will have a framework for making Bangladesh a developed country by 2041, as envisioned by Prime Minister Sheikh Hasina, he said.

“It will be an effective budget -- the most coordinated. Eventually I am competing with the previous budgets that I have given. I have reviewed them all and I am convinced -- that’s why I am saying this will be my best budget.”

Conversely, the budget looks to be the most contentious yet for the 83-year-old minister because of its uncompromising plans to go about boosting the state coffers.

The much-criticised VAT and Supplementary Duty Act 2012, which prescribes a uniform 15 percent VAT for most goods and services available in the country, is to take effect from the new fiscal year,.

Despite calls for cuts in the uniform rate from various quarters, Muhith has stuck to the original number. “We had a lot of discussions over the issue, but we have decided to keep it at 15 percent in the next fiscal year.”

The finance minister went on to state that prices should not rise under the new VAT law. “The businesses have raised the prices a bit for Ramadan -- this has nothing to do with VAT.”

The prices did not increase after any budget he had announced under the Awami League government, he said. “There have been no protests after my budgets except from the BNP.”

He signalled that he would take the VAT-exempted annual turnover limit for businesses to beyond Tk 3 million.

After the exemption threshold, businesses with turnover of up to Tk 8 million a year pay 3 percent tax. In fiscal 2017-18, the threshold will be Tk 12 million or more and the tax rate 4-5 percent.

“It means we are providing special exemptions to small businesses.”

Of the 800,000 businesses that have registered for VAT, only 25,000 to 26,000 pay the tax now, according to Muhith. “We will double the number to 50,000 in the next fiscal year.”

The government would be gunning for a 7.4 percent GDP growth in fiscal 2017-18, up from the current fiscal year’s target of 7.2 percent.

The transport and energy sectors will get the highest allocations, but human resource development would get prime attention.

“Human resource development is a long process and you have to have various kinds of projects for that. But you will easily notice that we have stressed on human resource development in the budget.”

Strengthening the upper level management and improving the capacities of technical institutions will get attention in the upcoming budget along with persons with disabilities.

“The focus on education, health and agriculture will remain, as usual.”

Muhith also said the ceiling for tax-free annual income can be raised slightly from Tk 250,000 now. “Then it’ll be fixed for good -- there will be no changes in future.”

He said they would try not to increase the burden on those who already pay taxes; the focus will be on expanding the taxpayer net.

Only one of the corporate tax rates may change in the upcoming budget.

The interest rate on savings certificate will be trimmed by June. “We’ll sit in a meeting after Jun 5 to discuss this.”

He assured that there would be no proposal to increase the prices of gas and electricity in this budget.

The upcoming budget would see an increase in allocation for the Hindu community as well those from the under-developed, river islands and marginalised areas.

A constant feature of the budgets Muhith has placed during the current government’s tenure is their progressive increase in size.

“This is the credit of the Sheikh Hasina government. And for me as her finance minister this is also a place of my satisfaction.”

The first budget of the current Awami League government’s tenure was that of fiscal 2009-10, whose size was less than Tk 1 trillion. This year, he is looking at Tk 4 trillion.

“I believe in fiscal 2018-19 we’ll be able to reach Tk 5 trillion-mark.”

Muhith, however, acknowledged that the government lacks the implementation capacity to back up the grand visions, but insisted that efficiency has increased over the years.

“We are implementing over Tk 3 trillion budget in this fiscal year, which is a remarkable improvement.”  

Asked about his failures, the minister said: “The district budget is one -- I could not do this. This is also the realisation of the prime minister.”

“If I could see through the implementation of the VAT act, that would be a great success.”