Md. MizanurRahman ACS :
Finance Minister AHM Mustafa Kamal has placed the national budget of Tk 6, 03,681cr for the FY 2021-2022 with the theme “Priority on Lives and Livelihoods, tomorrow’s Bangladesh”. This is the country’s 50th national budget and the 13th consecutive budget of the ruling Awami League government in the parliament. This proposed budget is 35,881cr taka more than the budget size of the FY2020-21, which was 5, 68,000cr taka. This proposed budget has given special emphasis on Health, Agriculture, Social Safety Nets, Employment, Flood and Disaster Management and Food security apart from addressing the Covid-19 related issues.
In the FY2021-22, the government is expecting to achieve 7.2pc GDP. Moreover the government is expecting to keep the inflation rate within 5.3pc.The Government has fixed 3,89,000cr taka as revenue target for the fiscal year 2021-2022 which is the 11. 3pc of the country’s total GDP. Here 3, 30,000cr taka will be collected through the National Board of Revenue.The budget deficit will be 2, 14,681cr taka which will be 6.2pc of the total GDP. Last year, the rate was 6.1pc. Here 1, 01,228cr taka will be collected from foreign sources and 1, 13,452cr taka will be collected from domestic sources. Here 76,452cr taka will be raised from the banking and other non-banking financial institutions and 37,001cr taka will be borrowed from the selling of Savings Certificates.
It is seen that the government is relying on the banking sector this year also as like the previous years due to non-collection of expected amount of money from external sources and shortfall in the revenue collection. So if the government borrows extra loan from internal sources, especially from the banking sector, then definitely private investment will be hampered and there will be a liquidity crisis and inflation will also occur. Therefore, implementation of the budget will be difficult if the expected funds are not collected from revenue collection and external sources.
This budget has proposed BDT 1, 07,614cr for the Social Safety Net Programs. This amount is 3.11pc of the total Gross Domestic Product (GDP). The budget has allocated BDT 1,920cr for the Ministry of Liberation war affairs. This budget has increased the monthly remuneration of the freedom fighters to BDT 20,000 from the existing 12,000 to improve their socio-economic condition.
To boost the country’s capital market, the Finance Minister has proposed to reduce the corporate tax.This proposed budget has reduced the corporate tax of the listed companies from 25pc to 22.5pc and the non-listed companies from 32.5pc to 30pc. The reduction of corporate tax will play a significant role in making the capital market more vibrant and will encourage the listed companies to give more dividends for their shareholders.
To promote the “Made in Bangladesh Brand” a 10 years tax holiday incentive has been announced for the three-four wheeler makers in the next fiscal year subject to complying with certain conditions. The manufacturers of certain home and kitchen appliances as well as the light engineering products will also enjoy this tax holiday incentive. The announcement of the tax holiday is an initiative towards overcoming dependence on imports and will help the local products to get an entry in the international market. This initiative will play a significant role in enhancing investment and employment of the country as well as in making Bangladesh a self-sufficient country in the very near future.
The new budget has proposed special stimulus package for the IT industry to prepare the nation to face the challenges of the Fourth Industrial Revolution. In this regard certain IT Farms will get special Tax Holiday Incentive for 10 years complying necessary requirements. This tax holiday proposal is appreciating because it will bring more investment, create more entrepreneurs as well as will create more employment. It will help our local IT farms to be self-sufficiency by reducing dependency on the imports.
The Finance Minister proposed to increase the corporate tax of mobile financial service providers (MFS), which have already become popular in the country. The Finance Minister wants to collect more revenue from this sector by raising taxes. As a result, companies in this sector will have to pay more taxes than before. In this budget, the Finance Minister has proposed to increase the tax rate for MFS companies listed in the stock exchange from 32.5 per cent to 36.5 per cent. If not listed, the tax rate will be increased from 32.5 percent to 40 percent.
The Finance Minister rightly said that if the proposed budget is implemented, new investments will come in the country and new employment will be created. As a result, new horizon will be opened in the country’s economy. But it is very much important to ensure accountability, transparency, equity and integrity in the implementation of the budget.
(Md. Mizanur is a Banker, working at Pubali Bank LTd. Email: [email protected]).
