2020-06-10 10:56:22 BdST
Funding Next Budget: Kamal still banks on NBR
One can only hope, is what one would remark once learning of Finance Minister AHM Mustafa Kamal's revenue target for the upcoming fiscal year, due to begin from July 1.
Despite the economy being in a state of recess for the best part of the past two-and-a-half months and with the health crisis revving to take an ominous turn and threatening another protracted general shutdown, Kamal is still holding out hopes that the National Board of Revenue would be able to fund the Tk 568,090 crore-budget he is set to unveil in the parliament tomorrow.
The revenue mobilisation target is most likely to be Tk 378,089 crore, up 0.07 percent from the target set in this fiscal year's original budget -- when the economy was riding on its tremendous growth momentum and not struggling with the economic impact of the pandemic.
Of the sum, the NBR would have to generate Tk 330,000 crore, up 1.35 percent from this fiscal year's target.
This would leave a budget deficit of about Tk 190,000 crore -- which would be 5.99 percent of GDP -- and half of it will be plugged with bank borrowing.
The non-development budget would likely to increase by as much as 13 percent due to widening social safety net, the continuation of stimulus packages to tackle the effect of coronavirus, said finance ministry officials.
"Helping people will be the focus. Providing them with food and jobs such that no one is in suffering would be the goal," Kamal told The Daily Star yesterday over the phone.
Ambitious revenue generation target
The revenue authority though is not at all confident that it would be able to get anywhere near the target Kamal would be setting for fiscal 2020-21.
It can manage at best Tk 250,000 crore next fiscal year, NBR Chairman Abu Hena Md Rahmatul Muneem said in a letter to Finance Secretary Abdur Rouf Talukder last month.
It would be tough to achieve fiscal 2020-21's target.
In fact, this fiscal year's collections would be the first since the country's independence that it would down year-on-year.
The tax collector would be able to manage at best Tk 220,000 crore in fiscal 2019-20, which would be about 6.25 percent less than last fiscal year's receipts.
Income tax relief
The finance minister is likely to set the income tax collection goal of Tk 103,000 crore for the next fiscal year, 9.75 percent lower than fiscal 2019-20's target.
Since the pandemic is battering livelihoods and choking cash flow across the board, the tax authority is working to give a breathing room the fixed income group, said a finance ministry official requesting anonymity as he is not authorised to speak with the media ahead of the budget session.
Tax-free limit to increase
Besides, the government may increase the tax-free income limit for individual taxpayers after five years to give relief to people in the lower-income bracket such that they can manage the economic hardship brought on by the pandemic.
The tax-free income threshold is likely to be Tk 3 lakh, up from Tk 2.5 lakh fixed back in fiscal 2015-16.
Besides, the income tax slabs may be rearranged as well. The rates of income tax now stand at 10 percent to 30 percent but it may be cut to 5 percent to 25 percent in the next fiscal year.
Apart from the individual taxpayers, the government is also considering reducing the corporate income by 2.5 percentage points to 32.5 percent for non-listed companies with the view to strengthening their capacity such that they bounce back as early as possible from the devastating effect of shutdown.
The government is eyeing to collect Tk 182,000 crore next fiscal from value-added tax (VAT) and supplementary duty, up 6.29 percent from this fiscal year's target.
Cigarette, the biggest sources of VAT and supplementary duty, is expected to contribute more to state coffer with its increased rates. The supplementary duty on cars would be hiked by a staggering 40 to 70 percent.
The government is also likely to earn Tk 37,800 crore from import and export duties in fiscal 2020-21.
Finance ministry officials said there is a strong likelihood of raising the import duties on mobile phone and SIM cards.
To achieve a higher tax collection target to finance the budget, the government may also increase the excise duty on accounts with debit or credit balance upwards of Tk 5 crore at any time of the year by as much as 15 percent.
The government is hoping to collect Tk 3,600 crore in excise duty next fiscal, up 61 percent from this year's goal.
Development goals take backseat
The National Economic Council has already approved Tk 205,145 crore for next fiscal year's annual development programme, an increase of 1.19 percent from this year.
The ADP is set to become a big casualty of the resource reshuffling that the government is set to deploy to bankroll the massive stimulus packages announced to jumpstart the economy once the rogue coronavirus has been tamed.
Over the years, the government has always increased the size of the development budget by about 20 percent from the outgoing year.
To accommodate the massive spending needed in the immediate future, the government has already suspended financing to all low priority projects.
On the other hand, non-development expenditure will be Tk 362,945 crore, a 13.25 percent increase from this fiscal year.
Black money may get full amnesty
Kamal may grant full amnesty to black money-holders if they invest their untaxed money by paying a tax of 10 percent on the amount.
The decision was taken to boost the state coffer, said a finance ministry official.
Black money is largely attributed to tax evasion and its direct impact is the loss of government revenue.
In the last five years, black money-holders were able to whiten their assets by investing in residential buildings by paying a tax of 10 per cent on the amount invested, which for regular taxpayers is between 10 and 30 per cent.
But the Anti-Corruption Commission had the power to raise questions about the source of the funds.
The window did not send the state cash registers ringing as the response has been lukewarm.
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