A Tk 5,23,190 crore budget of 2019-20 fiscal year will be announced Thursday with a hope to collect better revenues riding on new VAT law and expansion of the tax net.
It will be the first budget of the Awami League government’s third consecutive term as well as of Finance Minister AHM Mustafa Kamal while it will be the 49th budget of the country.The mammoth budget is expected to spur growth to 8.20 per cent, up from this year’s 8.13 per cent, propelled by more domestic demand, investment and exports and a set of reform measures, official sources said.
The budget outlay will be GDP’s 18.1 per cent and Tk 58,617 or 12.62 per cent higher than current fiscal’s original budget of Tk 4,64,573 crore.
However, the next fiscal’s budget will be Tk 80,649 crore or 18.22 per cent larger that current fiscal Tk 442,541 crore revised budget which will also be placed at the parliament on Thursday.
Total revenue collection target is being set at Tk 3,77,810 crore for FY20, including Tk 3,25,600 crore NBR taxes, Tk 14,500 crore non-NBR taxes and Tk 37,710 crore non-tax revenue.
Moreover, the government is also expecting Tk 4,168 crore grants from foreign sources, which will increase its yearly total income target to Tk 381,978 crore.
In the outgoing 2018-19FY, total revenue target was Tk 339,280 crore, including Tk 296,201 crore NBR revenue.The target is being downsized to Tk 316,612 crore in the revised budget while NBR’s target has been slashed to Tk 280,000 crore after the tax regulator undershot its target by a large margin.
During the first nine months of the current fiscal year, NBR witnessed a revenue shortfall of more than TK 50,000 crore but a yearly revenue hike of 7.27 per cent.
The new NBR revenue target is 9.93 per cent higher than FY19’s original target but 16.29 per cent higher than the revised target, achieving which will be a daunting task for the NBR, according to economic analysts.
NBR officials said the targeted growth in NBR revenues is greater than the last five years’ average growth of 15.16 per cent.
Out of the expenditure plan, Tk 310,262 crore is being earmarked as the government’s operational cost, while development expenditure’s size will be Tk 211,683 crore including Tk 202,721 crore Annual Development Programme (ADP).
The operational cost includes Tk 277,934 crore revolving cost that will cover Tk 52,797 crore domestic loan interests, Tk 4,273 crore overseas loan interests and Tk 32,328 crore as the government’s capital expenditure.
In the development expenditure segment, the government will spend on special schemes and Food for Work Programme (FWP) other than the ADP. Next year, Tk 2,184 crore will be set aside for FWP.
Budget deficit without grants will remain at Tk 145,380 crore which is IMF’s permissible risk-free limit of GDP’s 5 per cent.
To meet the deficit financing, the government seeks to bank on Tk 63,848 crore net foreign borrowing and Tk 77,363 crore domestic borrowing including Tk 47,364 crore banks loans and Tk 27,000 crore loans from savings certificates. The finance minister may roll out some reform proposals for the banking sector, capital market, savings certificate sales and social security schemes.
Even though MPO for private educational institutions teachers has been stopped for many years, Kamal will allocate Tk 1,500 crore to accommodate 2,500 new teachers in the system.
13 lakh more impoverished people will be brought under the government’s social safety net schemes to raise the number of total beneficiaries to 89 lakh.
Besides, start-up fund for unemployed youth, the introduction of crop insurance on a pilot basis will be new features of the budget, while people going abroad may be brought under the insurance facility.
In a bid to earn more revenues, the government will put in place the new VAT law from the budget day with five different rates –15 per cent, 10 per cent, 7.5 per cent, 5 per cent and 2 per cent, backtracking from its earlier position to enforce a single 15 per cent rate.
At the same time, the government won’t increase the individual income tax-free limit as the move may bring many taxable people out of the tax net, official sources said.
There might be an announcement for bringing 80 lakh more people under the tax net with a target to raise the tax-GDP ratio to 15.3 per cent from existing 9.6 per cent line with the 7th five-year plan. Apart from tax benefits, existing export sectors and potential new sectors will get cash incentives to lure investment and create employment.