Already hit hard by high inflation, people are going to face more pressure as the government has taken various measures to raise the revenue in the upcoming budget proposal to address the country’s economic crisis.
The government aims to raise he revenue through some changes in VAT and tax policy, lifting the tax holidays to meet conditions of International Monetary Fund IIMF) and allowing the black money holders to whiten money through 15 per cent tax and bringing more people under the tax net.
The move will ultimately create a fresh round of burden among the people who have already been hit hard due to the high inflation.
Finance Minister Abul Hassan Mahmood Ali is set to place about TK 7 lakh 96 thousand and 900 crore budget proposal for the 2024-2025 fiscal tomorrow with a revenue target of Tk 5 lakh 40 thousand crore.
The size of the national budget increases every year and the pressure of meeting the high expenses of the budget finally falls on the people, experts said.
Like every year, the government eyes indirect tax to raise the revenue, resulting in increasing the tax on imports and VAT net. As a result, people have to buy products at high rate, they added.
Senior Research Fellow of the Center for Policy Dialogue (CPD) Towfiqul Islam Khan told the Bangladesh Post, “As electricity prices rise, careful consideration of subsidies becomes essential. Subsidies in the agriculture sector have a direct benefit for everyone. Likewise, it's crucial to assess the impact of incentives in the export and remittance sectors on our economy. Our stance is that any proposed budget should not impose any new burden on the mass people.” Sources in the finance ministry and National Board of Revenue (NBR) said that the suggestions of the IMF were given importance while framing the budget proposal.
High inflation has been prevailing in the country for the last two years but the government has failed to contain the soaring prices of essentials because of the syndication. People have to spend most of his income for buying products with a high rate.
A statistic of Bangladesh Bureau of Statistics (BBS) shows that the general point-to-point inflation rate in May has slightly increased to 9.89 percent due to the continuous increase in food inflation.
According to the data of the BBS, the point-to-point food inflation has slightly increased to 10.76 percent in May, 2024 which was 10.22 percent in April.
At present, some 329 products are enjoying duty-free facilities, including food items, fertilisers, gas, raw materials of pharmaceutical industries and agricultural inputs. But, the NBR is going to impose 1 per cent tax on import of some 50 items, which include wheat, maize, mustard seeds, cotton seeds, various vegetable seeds, coal, insulin, steel products and industrial raw materials.
Despite the high inflation, the government will not increase the tax-free income limit. At present, an individual, who earns minimum Tk 3.5 lakh, has to pay tax. Although the government has been requested to increase the tax-free ceiling, it may refrain from increasing the limit.
On the other hand, the government has decided to give a chance to the black money holders to whiten their money by giving 15 per cent tax. The black money holders may be able to whiten their money without facing any question.
The opportunity may continue for a year. Two years ago, the government allowed the black money holders to whiten their money by giving 10 per cent tax. After being failed to attract the black money holders, the government scrapped the provision. The next year the government gave another opportunity to bring back the laundered money but that attempt was also not successful.
Record shows that some Tk 47 thousand crore has been whitened so far. Besides forming a taskforce, the army-backed caretaker government in 2007 and 2008 provided a scope to whiten black money. Some 32,000 tax payers whitened their money during that period.
The NBR also plans to impose VAT on Metro Rail service, which becomes a popular mode of transport. The NBR wants to impose 15 per cent VAT from the next fiscal year.
Asked about the opportunity of whitening black money, Towfiqul Islam Khan said that they do not support such initiative which may discourage the honest taxpayers from paying tax.
At the same time, he opined that such move would encourage the illegal wealth owners to earn more money through illegal ways.
“We have observed that such opportunities to legalise black money have not brought any substantial benefits to the economy,” he added.
