Staff Reporter :
The Finance Minister AMA Muhith plans to revise the budget 2017-18 year as the government faces revenue deficit about Tk 20000 crore due to suspension of the uniform VAT Act for two years.
Talking to reporters at his secretariat office on Sunday he said, “We have to do it much earlier as many figures in the budget will be changed.”
The Parliament has passed the budget of Tk 4.26 lakh crore for the fiscal year 2017-18 with a revenue target of Tk 2.88 lakh crore.
From value-added tax, the government initially targetted to earn more than Tk 91000 crore, a fourth of the total target. Now after deferring the implementation of the VAT law, the government will face a shortfall of Tk 20000 crore.
The government made the VAT law following recommendations by the International Monetary Fund.
Asked whether deferring the implementation of the law will impact the government’s relations with the IMF, Muhith said he did not think so.
“We wanted to implement the law in 2016, but could not. We cannot do this time also. But our failure is our own reality. How can it worsen relations with them?” he pointed.
Analysts have suggested alternative tax sources that may help the government tackle the pressure.
Prime Minister Sheikh Hasina said in her closing speech in the Parliament on the budget that the Tk 20000 crores deficit in revenue will have to be overcome somehow.
About managing the looming deficit, Muhith pointed to the target of Tk 85176 crore revenue from income and corporate taxes. “Now these will be the main sources of revenue.”
Muhith also said, a committee on savings certificates will sit within a few days to lower interest rates on the debt instruments.
“But the new rates will not harm pensioners and middle- and lower-income groups,” he said.
He noted that the National Board of Revenue issued an SRO keeping the tax at source for garments sector at 0.7 percent. Muhith had proposed to raise the tax to one percent, but backtracked on his proposal after garment exporters urged the Prime Minister to keep the previous rate.
“Prices of garments have dropped in the US and Europe. The exporters are facing losses. So we have considered their demand,” Muhith said.
