Proposed budget ‘implementable’

FT ONLINE

Terming the proposed budget for FY 2018–19 “implementable”, finance minister AMA Muhith said yesterday that his government has prepared the budget after careful analyses and calculations.

“A budget is not proposed without considering whether it could actually be implemented,” he told reporters at a post-budget media press briefing at the capital’s Osmani Memorial Auditorium. The finance minister, who was flanked by several other ministers and top bureaucrats at the podium, answered questions about the proposed Tk. 464,573-crore budget placed in Parliament on Thursday.

At the briefing, Muhith dismissed expert views that the FY 2018–19 budget was populist and election-centric. “Every budget is election-oriented as we propose budgets that would be liked by people,” he said.

The minister also said the proposed budget for the upcoming fiscal year embodies his party’s vision “not only for an election year but for every year.”

Explaining the co-relation between budget implementation and an election year, Muhith said: “Even though it’s an election year, there is no electoral atmosphere in the country at present. When that happens, development work gets hampered. Since that has not happened yet, implementation of the budget will not be affected.”

About the rationale behind the target of setting a GDP growth rate of 7.8 per cent, Muhith said: “Reaching the target GDP growth next year is possible.” Criticising those say that Muhith’s plan of implementing the latest budget or achieving the targeted GDP growth is unrealistic and faulty, the finance minister said: “Only those who don’t have the slightest bit of patriotism in them continue to say such things.”

Muhith also brushed aside the allegation that the proposed budget will widen the gap between the “the haves and have-nots”.

According to him, the discrimination between the poor and the rich people has not increased across the country in the Awami League’s term in office.

The minister said the actual percentage of poor people is decreasing.

Citing data, Muhith said the percentage of poor people in the population has come down to 22.4 per cent from 30 per cent in the last seven years.

When asked about the government’s move to lower the corporate tax rate for banks, insurance and financial institutions by 2.5 per cent in the proposed budget, Muhith said the banking sector is being given “the facility so that banks could bring down the interest rate on loans to single digit”.

He said the government has taken the decision following several high-level meetings before the budget was announced.

Planning minister AHM Mostafa Kamal was also on the podium. He told reporters that the main intention behind reducing corporate tax on banking and giving some respite to financial institutions “is to endure single-digit interest rates.”

“If the interest rate can be brought down to single digit, it will give the much needed impetus to the economy and will increase the financial flow,”

he said.

The finance minister also said that there is no possibility of seeing an independent bank commission soon. “It was my long-time wish to establish a bank commission. I have even prepared some documents on this. But I believe it will not be possible to establish such a commission within a short time,” he added.

He further said that he would hand over the documents relating to the bank commission to the next government, if needed.

In reply to a query on saving certificates, Muhith said that the interest rates on various savings certificates are not permanent and reviewed every two to three years. He also said a meeting on this is likely to be held next month to review the interest rates on various savings tools.

During the press conference, National Board of Revenue (NBR) chairman Md Mosharraf Hossain Bhuiyan said that the budgetary provision to impose a 5 per cent VAT on e-commerce businesses was a “printing mistake”.

There was a public and industry outcry after finance minister AMA Muhith said the government planned to impose a 5 per cent VAT on e-commerce businesses while delivering the budget speech on Thursday.

“There will be no VAT on e-commerce businesses,” confirmed the NBR chairman yestreday.

“We have initiated a process to bring virtual businesses like Facebook, YouTube, and Google under the tax net. But we are not considering bringing e-commerce businesses within the VAT bracket,” he said.

About taxation on these global tech giants, Muhith said the volume and the nature of cross-border transactions have significantly changed with the progression of economic globalisation and virtual-plus digital economy.

“Our economy is far more open now. As a result, the risk of tax avoidance has significantly increased. Many foreign entities are earning income

in Bangladesh through virtual and digital transactions, but we aren’t getting adequate tax from them,” he added.

The finance minister said since these virtual and digital business transactions are comparatively new, the tax laws of the country are not sufficiently up-to-date to bring all virtual transactions under the tax net.

Agriculture minister Begum Matia Chowdhury, information minister Hasanul Haq Inu, PM’s economic affairs adviser Dr Moshiur Rahman, PM’s energy adviser Dr Tawfiq-e-Elahi Chowdhury, Bangladesh Bank Governor Fazle Kabir, GED member of the Planning Commission Dr Shamsul Alam, Finance Division secretary Mohammad Muslim Chowdhury, ERD secretary Kazi Shofiqul Azam spoke at the press conference. State minister for finance and planning MA Mannan was present on the occasion.