Finance minister AMA Muhith is set to propose today yet another incremental budget of over Tk 4,64,000 crore for the next financial year 2018-19 with clear hints that the affluent class would be benefitted from the tax proposals while the middle class would be hard pressed.
Muhith, who would earn rare distinction by placing national budget tenth time in a row and overall on a dozen occasions, already said that he would reduce the corporate tax and keep the income tax threshold unchanged to collect overall revenue of Tk 3,39,280 crore.
The octogenarian finance minister would rely on loans from local and foreign sources for Tk1,25,293 crore deficit financing in FY19 coinciding with the national polls scheduled for before January 2019.
Economists noted that companies paying 42 per cent tax would mainly be benefitted from the corporate tax cut to 37.5 per cent although such measure might hamper revenue generation without giving guarantee of higher private investment.
Keeping unchanged the income tax threshold of Tk 2,50,000, the government would mainly haunt taxpayers belonging to the middle-income groups, they said.
Policy Research Institute executive director Ahsan H Mansur told New Age on Tuesday that affluent class should be happier with the proposed cut in corporate tax, already high in Bangladesh.
Many taxpayers may go out of tax net or many young may delay their entry into tax net if the income tax threshold is increased to Tk 3,00,000, he said.
The number of individual tax payers is hovering around 34 lakh as of March would continue to increase in the coming years as the National Board of Revenue has plans to keep the income tax threshold unchanged for several more years.
Ahsan said that it was imperative for the government to widen the tax net for higher revenue generation.
Centre for Policy Dialogue distinguished fellow Debapriya Bhattacharya opposed the proposed cut in corporate tax, saying that it would hamper revenue generation badly.
Reduction in corporate tax would not ensure investment as suggested by businesses, he said.
He noted that reduction of corporate tax would not be effective in attracting private investment when the overall investment climate was not conducive to business and employment generation.
According to economists, the government needs investment of 34 per cent of the gross domestic product for higher employment generation, but the actual investment is hovering around 31 per cent of the GDP.
Unemployment rate among university graduates increased by 1 per cent to 11.2 per cent along with fall in new job creation by one lakh in Bangladesh in 2016-17, said a report of the Bangladesh Bureau of Statistics released in March 2018.
Besides, the economists criticised the falling implementation rate of the budget.
Former interim government adviser Mirza Azizul Islam pointed out that implementation rate of budget fell to about 80 per cent in recent years from over 90 per cent a decade ago.
He described it as a big flaw of the budget nowadays and blamed lack of capacity of the implementing agencies.
At a briefing on Monday at the ministry, Muhith admitted that the falling budget implementation was a big worry for the government.
He, however, hoped that the implementation rate of budget would go up over 90 per cent in the outgoing FY18.
Finance minister AMA Muhith is set to place the national budget with the projection of 7.8 per cent GDP growth and 5.6 per cent inflation for FY19 in the parliament at 12:30pm today.
This would be the last budget of the present government’s current five-year tenure.
Earlier, the executive committee on the national economic council approved annual development programme of Tk 1,73,000 crore for FY19.
