The upcoming budget will put special focus on rural infrastructures aligned with the government’s electoral pledges alongside boosting investment to accelerate growth.
In its manifesto for the 11th parliamentary polls held on December 30 last year, Awami League made a commitment for making urban facilities available in rural areas, if voted to power.The government seeks to reflect this commitment in its first budget for FY20, which is likely to be announced on June 13, finance ministry officials said.
The next fiscal’s budget size has been primarily estimated at Tk 524,950 crore, which will be Tk 60,000 crore or 13 per cent higher than the current fiscal’s budget.
Initiatives are being taken through budgetary steps to create jobs and expand small industries in rural areas and turn rural haat-bazaars into economic powerhouse, official sources.
As part of the plan, more allocations will be made for expansion of services of internet, satellite television, online banking and postal savings to every village.
Rural road network will be improved to establish seamless connectivity between rural and urban areas.
Rural electrification campaign will be intensified further and alternative arrangement will be made for the areas where conventional electrification won’t be possible.Initiatives will also be taken for augmenting loan flow to agriculture and small industries in rural areas along with introducing crop insurance.
With these efforts, the government intends to advance its campaign for a poverty-free nation by 2041.
There might be an announcement in the upcoming budget for providing job to a member of each family to bring those families out of social safety net schemes, sources said.
GDP growth target is likely to be set at 8.5 per cent while keeping inflation target within 5 per cent. For this, some measures might be rolled out to increase credit flow to productive sectors.
The tentative revenue collection target is being set at Tk 397,000 crore with keeping budget deficit at 5 per cent. NBR’s tax collection target is being set at Tk 341,700 crore.
To meet higher financing needs, the government has adopted a policy not to overburden people with taxes. Instead, new fields will be explored alongside expanding the tax net.
New VAT law will be implemented from next July with four new VAT rates —-15, 10, 7.5 and 5 per cent, although the law primarily sought to introduce a 15 per cent uniform VAT rate.
After taking the office, Finance Minister AHM Mustafa Kamal on several occasions has said they have no intention for putting extra pressure on people for collecting more money to meet higher financing needs.
Kamal has hinted that they seek to lower pressure on people who have been paying taxes on a regular basis while exerting more pressure on those who don’t pay taxes.
“It is very unfortunate in our country that those, who once started paying tax, keep on the practice in their whole life. We now want to reverse the trend,” he repented at a VAT related meeting on Sunday evening.
He also vented frustration over the country’s nearly 10 per cent tax-GDP ratio, which he thinks should not be below 15 to 16 per cent, given the middle-class size of 40 million population.
“But I want to reassure that we won’t hurt any people with huge taxes. We seek to implement the new VAT law so that people don’t feel the pinch,” he told businessmen in the meeting.
At Sunday’s meeting, both NBR and businessmen reached a consensus on the multiple VAT rates.
The meeting also decided to raise the turnover tax exemption ceiling to Tk 50 lakh from existing Tk 30 lakh. The upper ceiling bar was also raised from Tk 80 lakh to Tk 3 crore.
A consensus was reached as well for raising the turnover tax rate from existing 3 per cent to 4 per cent for the Tk 50 lakh to Tk 3 crore ceiling, an NBR official informed.
For higher turnover, truncated tax rates of 10 per cent, 7.5 per cent and 5 per cent will have to be paid, he also explained.
The new budget may cut corporate tax, introduce automated savings certificate management, and outline initiatives to form an asset management company to realise defaulted loans.