Hot on the heels of cancelling the full implementation of the Value Added Tax and Supplementary Duty Law 2012, finance minister AMA Muhith has hinted at revising the national budget much ahead of usual time.
‘I will place a revised budget much earlier to adjust the changes and figures of the budget,’ he said on Saturday while talking to reporters at his secretariat office during a post-budget discussion.
The changes are must because of cancellation of the 15 per cent uniform rate of VAT proposed in the original budget, he added.
The finance ministry officials said the government used to revise the annual budget in the third quarter of the fiscal year.
But the massive changes, happened only once in 2005 when the government had revised duty structure of 3,000 imported products one-and-a-half months into the fiscal year 2005-06, required the government to revise the fiscal budget before the end of the second quarter, they said.
Muhith, who entered the record book for giving nine national budgets in a row, dismissed any scope for achieving the revenue target and also focused on saving certificates, is looking for possible ways out to make up the revenue shortfall and mend relation with the donor agencies during parley.
The target of revenue earnings from the VAT is quite impossible, he said.
Banking on the full implementation of the VAT and Supplementary Duty Law 2012, the finance minister had fixed revenue generation target of Tk 2,87,990 crore in the new fiscal year—Tk 91,000 crore from the VAT.
It has already been calculated by the government policy makers that suspension of full implementation of VAT law amid non-cooperation from the businessmen would cause Tk 20,000 crore shortfall from the outset of the new fiscal year.
The Centre for Policy Dialogue has, however, said that the revenue shortfall would range from Tk 43,000 crore
to Tk 55,000 crore in the current fiscal year because of suspension of the new VAT law.
Responding to a query, Muhith said he would hold meetings with the taxmen to fix the revised components of the revenue targets to manage the yawning budget deficit.
He hoped that the target of Tk 85,176 billion revenue from income and corporate taxes would be the main sources of revenue.
The government had passed the VAT and Supplementary Duty Law 2012 to appease the International Monetary Fund and World Bank five years ago.
Asked whether suspension of the implementation of the law would impact the government’s relations with the IMF and WB, Muhith answered in the negative.
‘We wanted to implement the law last year, but could not. We cannot this time too. But our failure is happening in our own reality. How can it worsen relations with them?’ he said.
He also said none of the Washington-based donors gave any reaction to the current national budget. He said he expected that the reaction on budgets from the WB and IMF would be submitted soon.
Muhith said a national committee would sit within a few days to revise the interest rates on the saving certificate instruments.
He ensured that the new rates would not pose any harm to pensioners and middle- and lower-income groups.
Muhith noted that the National Board of Revenue issued an SRO keeping the tax at source for garments sector at 0.7 per cent.
He said he had proposed to raise the tax to 1 per cent, but backtracked on his proposal after garment exporters urged the prime minister to keep the previous rate.
He said the garment exporters were saying about falling prices of apparel items in the US and Europe and their losses.
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