Bigger budget with bigger deficit; fight ahead
Revenue target Tk 139,670 crore, overall deficit Tk 52,068 crore
Dhaka, June 7 (UNB) – Finance Minister AMA Muhith on Thursday placed in Parliament an ambitious Tk 191,738 crore national budget for the next fiscal (2012-13) projecting a 7.2 percent GDP growth.
The size of the proposed budget for the fiscal 2012-13 is also Tk 30,525 crore, or 18.93 percent higher than the Tk 161,213 crore revised budget of the outgoing fiscal.
The Finance Minister also proposed an allocation of Tk 136,738 crore for non-development and other expenditure.
While placing the 4th budget of the Awami League-led grand alliance government at 3:28 pm, he expressed the hope that the proposed budget in the context of domestic and external environment would support growth, contain inflation and reflect aspirations of the general people.
Muhith estimated a total of Tk 139,670 crore in revenue or 13.4 percent of GDP leaving a deficit of Tk 52,068 crore to be met from foreign assistance and internal sources.
He envisaged an ADP allocation of Tk 55,000 crore or 5.3 percent of GDP against the current year’s revised ADP of Tk 41,000 crore.
The Finance Minister also hoped that inflation will be moderate, expecting to bring it down to 7.5 percent in the next fiscal year because of the outlook of declining trend in food prices in the international market and satisfactory domestic agricultural production.
He said of the overall budget deficit of Tk 52,068 crore, Tk 18,584 crore (1.8 percent of GDP) will be financed from external sources and Tk 33,484 crore (3.2 percent of GDP) will be financed from domestic sources.
Of the domestic financing, Tk 23,000 crore (2.2 percent of GDP) will come from the banking sources and Tk 10,484 crore (1.0 percent of GDP) from non-bank sources.
Muhith read out parts of his lengthy 149-page document for about four and half hours amidst frequent cheers and thumping of desks by the treasury bench members.
President Zillur Rahman was present for some time at the President’s Gallery of the House as the Finance Minister delivered the budget speech.
Leaders of the business community, economists and members of the diplomatic corps were also present in the gallery during the Finance Minister’s lengthy budget speech that ended at 8 pm.
The proposed budget witnessed the highest 27.8 percent of total allocation for physical infrastructure sector of which 14.9 percent has been proposed for overall agriculture and rural development, 7.0 percent for communication sector, and 5.0 percent for power and energy sectors.
The social infrastructure sector witnessed 24.2 percent allocation of which 20.5 percent has been proposed for human resource (education, health, and others) sector.
The Finance Minister said a satisfactory growth in trade and agriculture sectors will continue as the global economy turns around by 2013, there would be a consistent credit flow to the development sectors and above all deficits in power, energy and infrastructure will decrease gradually.
He proposed increasing the minimum tax payable by an individual taxpayer to Tk 3,000 from Tk 2,000 fixed three years ago.
The threshold for tax-free income has been kept unchanged with Tk 1.80 lakh despite demands from various stakeholders to increase the limit in line with the soaring inflation.
The tax-free income ceiling was raised to Tk 1.80 lakh in the 2011-12 fiscal from Tk 1.65 lakh in 2010-11.
The Finance Minister also proposed the income threshold for women and elderly taxpayers (65 years of age and above) at Tk 2 lakh while it is Tk 2.50 lakh for physically-challenged taxpayers.
Meanwhile, the existing corporate tax rates for different companies remained the same.
Mentioning several measures to restore investor’s confidence in the capital market, Muhith said the government will introduce demutualization programme in the stock exchanges by the next fiscal year in a bid to bring transparency in the functions of the stock exchanges and the market system.
Dividend income of up to Tk 5,000 will get tax exemption in the next fiscal, a new incentive for share investors, thousands of whom suffered huge losses from the market downswings since January last year.
He proposed the tax exemption in line with efforts to strengthen the capital market along with maintaining its stability.
Presently, dividend income is added to the main income of an individual and the tax is calculated on the total amount. A 10 percent tax deducted at source is also set in the dividend income.
The Finance Minister also offered 10 percent tax rebate facility for the companies that will float 20 percent shares of paid-up capital through initial public offering (IPO) to encourage new listing on the stockmarket.
He also proposed to reduce the income tax rate of merchant banks from existing 42.5 percent to 37.5 percent.
A few other luxury and consumer items including air-conditioners, children's toys like dolls, puzzles and tricycles, and playing cards will see their prices increase under the new budget.
The budget also aims to keep prices of certain essential items affordable while discourage imports of betel nuts, jams, fruit jellies, fruits, fruit juices, sauces, cars and air-conditioners. Cigarettes will be costlier after months of campaigning by anti-tobacco activists.
Muhith also proposed an increase of taxes in all four value slabs along with a 10 percent increase on tobacco export.
But, considering the public need, essential commodities like fertiliser, seed, cotton and medicine will continue to enjoy tax exemption.
Small cars up to 1500cc will see their prices go up as the supplementary duty has been raised from 30 percent to 45 percent. Larger cars with a capacity between 1801 and 2000cc will also see their prices raised as the proposed supplementary duty has been increased from the prevailing 100 to 150 percent.
Considering its welfare impact, a prevailing 20 percent tax of nutritional supplement for pregnant and lactating mothers has been proposed to be completely withdrawn.
About the nagging power crisis, the Finance Minister promised generation of 8,294 MW of electricity by 2013 and proposed an allocation of Tk 9,544 crore for the power and energy sector.
He, however, admitted that despite all these efforts, people in Dhaka and elsewhere has been suffering a great deal due to load-shedding.
Stressing the need for further advancing the dynamism of the country’s economy for the sake of the nation, he said: “We would resist any ill-motivated interruption.”
Expressing his strong confident that all would act wisely and understand the spirit of the people and their hopes and aspirations, Muhith said: “We shall stand united and build a prosperous, happy and caring Bangladesh.”
He said: “We are confident – our people, our country will emerge victorious and stand upright with dignity. It’s only a matter of time.”
The size of the proposed budget for the fiscal 2012-13 is also Tk 30,525 crore, or 18.93 percent higher than the Tk 161,213 crore revised budget of the outgoing fiscal.
The Finance Minister also proposed an allocation of Tk 136,738 crore for non-development and other expenditure.
While placing the 4th budget of the Awami League-led grand alliance government at 3:28 pm, he expressed the hope that the proposed budget in the context of domestic and external environment would support growth, contain inflation and reflect aspirations of the general people.
Muhith estimated a total of Tk 139,670 crore in revenue or 13.4 percent of GDP leaving a deficit of Tk 52,068 crore to be met from foreign assistance and internal sources.
He envisaged an ADP allocation of Tk 55,000 crore or 5.3 percent of GDP against the current year’s revised ADP of Tk 41,000 crore.
The Finance Minister also hoped that inflation will be moderate, expecting to bring it down to 7.5 percent in the next fiscal year because of the outlook of declining trend in food prices in the international market and satisfactory domestic agricultural production.
He said of the overall budget deficit of Tk 52,068 crore, Tk 18,584 crore (1.8 percent of GDP) will be financed from external sources and Tk 33,484 crore (3.2 percent of GDP) will be financed from domestic sources.
Of the domestic financing, Tk 23,000 crore (2.2 percent of GDP) will come from the banking sources and Tk 10,484 crore (1.0 percent of GDP) from non-bank sources.
Muhith read out parts of his lengthy 149-page document for about four and half hours amidst frequent cheers and thumping of desks by the treasury bench members.
President Zillur Rahman was present for some time at the President’s Gallery of the House as the Finance Minister delivered the budget speech.
Leaders of the business community, economists and members of the diplomatic corps were also present in the gallery during the Finance Minister’s lengthy budget speech that ended at 8 pm.
The proposed budget witnessed the highest 27.8 percent of total allocation for physical infrastructure sector of which 14.9 percent has been proposed for overall agriculture and rural development, 7.0 percent for communication sector, and 5.0 percent for power and energy sectors.
The social infrastructure sector witnessed 24.2 percent allocation of which 20.5 percent has been proposed for human resource (education, health, and others) sector.
The Finance Minister said a satisfactory growth in trade and agriculture sectors will continue as the global economy turns around by 2013, there would be a consistent credit flow to the development sectors and above all deficits in power, energy and infrastructure will decrease gradually.
He proposed increasing the minimum tax payable by an individual taxpayer to Tk 3,000 from Tk 2,000 fixed three years ago.
The threshold for tax-free income has been kept unchanged with Tk 1.80 lakh despite demands from various stakeholders to increase the limit in line with the soaring inflation.
The tax-free income ceiling was raised to Tk 1.80 lakh in the 2011-12 fiscal from Tk 1.65 lakh in 2010-11.
The Finance Minister also proposed the income threshold for women and elderly taxpayers (65 years of age and above) at Tk 2 lakh while it is Tk 2.50 lakh for physically-challenged taxpayers.
Meanwhile, the existing corporate tax rates for different companies remained the same.
Mentioning several measures to restore investor’s confidence in the capital market, Muhith said the government will introduce demutualization programme in the stock exchanges by the next fiscal year in a bid to bring transparency in the functions of the stock exchanges and the market system.
Dividend income of up to Tk 5,000 will get tax exemption in the next fiscal, a new incentive for share investors, thousands of whom suffered huge losses from the market downswings since January last year.
He proposed the tax exemption in line with efforts to strengthen the capital market along with maintaining its stability.
Presently, dividend income is added to the main income of an individual and the tax is calculated on the total amount. A 10 percent tax deducted at source is also set in the dividend income.
The Finance Minister also offered 10 percent tax rebate facility for the companies that will float 20 percent shares of paid-up capital through initial public offering (IPO) to encourage new listing on the stockmarket.
He also proposed to reduce the income tax rate of merchant banks from existing 42.5 percent to 37.5 percent.
A few other luxury and consumer items including air-conditioners, children's toys like dolls, puzzles and tricycles, and playing cards will see their prices increase under the new budget.
The budget also aims to keep prices of certain essential items affordable while discourage imports of betel nuts, jams, fruit jellies, fruits, fruit juices, sauces, cars and air-conditioners. Cigarettes will be costlier after months of campaigning by anti-tobacco activists.
Muhith also proposed an increase of taxes in all four value slabs along with a 10 percent increase on tobacco export.
But, considering the public need, essential commodities like fertiliser, seed, cotton and medicine will continue to enjoy tax exemption.
Small cars up to 1500cc will see their prices go up as the supplementary duty has been raised from 30 percent to 45 percent. Larger cars with a capacity between 1801 and 2000cc will also see their prices raised as the proposed supplementary duty has been increased from the prevailing 100 to 150 percent.
Considering its welfare impact, a prevailing 20 percent tax of nutritional supplement for pregnant and lactating mothers has been proposed to be completely withdrawn.
About the nagging power crisis, the Finance Minister promised generation of 8,294 MW of electricity by 2013 and proposed an allocation of Tk 9,544 crore for the power and energy sector.
He, however, admitted that despite all these efforts, people in Dhaka and elsewhere has been suffering a great deal due to load-shedding.
Stressing the need for further advancing the dynamism of the country’s economy for the sake of the nation, he said: “We would resist any ill-motivated interruption.”
Expressing his strong confident that all would act wisely and understand the spirit of the people and their hopes and aspirations, Muhith said: “We shall stand united and build a prosperous, happy and caring Bangladesh.”
He said: “We are confident – our people, our country will emerge victorious and stand upright with dignity. It’s only a matter of time.”
Comments
No Comments on this News
