Balancing acts in the budget
Monday, 2 July 2007
Mohammad Mohsin
THE national budget for the fiscal year 2007-08 is now operational with effect from July 01, 2008. The Taka 871.37 billion budget was earlier approved by the President last Thursday. The finance adviser stated at a press conference Saturday that he and his colleagues received some 1,800 opinions on the budget from members of the public, businesses, experts and economists and these were duly evaluated for their seriousness and real merit. The objectivity of the adviser's statement was seen reflected in the adjustments made in the final version of the budget before its endorsement that included retention of the zero duty facility in many cases, significant reduction of proposed tariffs as were demanded on some items and waiving taxation proposals from emerging sectors. The budgetary exercise has, thus, taken into account the suggestions of a cross section of experts and rightful interest groups.
The budget for the current fiscal has sought to strike a balance between competing requirements. The original budget proposal manifested government's strong urge to fill its coffers. But ultimately, the temptation was seen mellowed down as proposals to impose tariff on 127 imported items which had been enjoying zero tariff facilities, were withdrawn. The items on which the zero tariff would prevail include some essential consumer products. Newsprints have been included in this list which should come as a boost for this industry. Significant reductions in tariff on some items was made through 33 statutory revenue orders (SROs) simultaneously with the budget's approval. The same vitally include tariff on capital equipment particularly that of the textile industry and computer accessories. Tariff on these have been pushed down from the proposed 10 per cent to 5.0 per cent in response to the strident demand from businesses in these sectors.
However, it should be noted that on the whole, the government has met the demands for retaining the zero tariff facility on many consumer items that would have a beneficial effect on the consumption of the common man. The same concern was seen in scaling down substantially the proposed tariff on capital equipment and computer accessories with a view to encouraging domestic enterprising. But the overall zero tariff facility which could be availed by some 530 items in the past has come down to 403. This means that the government has followed a selective policy of providing some kind of support to sectors that would face a non level playing field without the same while imposing tariff on the ones for the first time which, as the government considers, will be able to bear their new financial obligations.
However, as the proverbial saying goes that the taste of the pudding lies in the eating, the operational efficacies of the 2007-8 budget will depend greatly on fine-tuning government's revenue collection activities and mechanisms and ensuring adequate and timely disbursement of foreign aid. All concerned would now like to see how the new fiscal measures help stimulate investments particularly private investment, contain government's borrowings for meeting spending requirements, particularly for non productive areas and increase credit flow to the private sector.
THE national budget for the fiscal year 2007-08 is now operational with effect from July 01, 2008. The Taka 871.37 billion budget was earlier approved by the President last Thursday. The finance adviser stated at a press conference Saturday that he and his colleagues received some 1,800 opinions on the budget from members of the public, businesses, experts and economists and these were duly evaluated for their seriousness and real merit. The objectivity of the adviser's statement was seen reflected in the adjustments made in the final version of the budget before its endorsement that included retention of the zero duty facility in many cases, significant reduction of proposed tariffs as were demanded on some items and waiving taxation proposals from emerging sectors. The budgetary exercise has, thus, taken into account the suggestions of a cross section of experts and rightful interest groups.
The budget for the current fiscal has sought to strike a balance between competing requirements. The original budget proposal manifested government's strong urge to fill its coffers. But ultimately, the temptation was seen mellowed down as proposals to impose tariff on 127 imported items which had been enjoying zero tariff facilities, were withdrawn. The items on which the zero tariff would prevail include some essential consumer products. Newsprints have been included in this list which should come as a boost for this industry. Significant reductions in tariff on some items was made through 33 statutory revenue orders (SROs) simultaneously with the budget's approval. The same vitally include tariff on capital equipment particularly that of the textile industry and computer accessories. Tariff on these have been pushed down from the proposed 10 per cent to 5.0 per cent in response to the strident demand from businesses in these sectors.
However, it should be noted that on the whole, the government has met the demands for retaining the zero tariff facility on many consumer items that would have a beneficial effect on the consumption of the common man. The same concern was seen in scaling down substantially the proposed tariff on capital equipment and computer accessories with a view to encouraging domestic enterprising. But the overall zero tariff facility which could be availed by some 530 items in the past has come down to 403. This means that the government has followed a selective policy of providing some kind of support to sectors that would face a non level playing field without the same while imposing tariff on the ones for the first time which, as the government considers, will be able to bear their new financial obligations.
However, as the proverbial saying goes that the taste of the pudding lies in the eating, the operational efficacies of the 2007-8 budget will depend greatly on fine-tuning government's revenue collection activities and mechanisms and ensuring adequate and timely disbursement of foreign aid. All concerned would now like to see how the new fiscal measures help stimulate investments particularly private investment, contain government's borrowings for meeting spending requirements, particularly for non productive areas and increase credit flow to the private sector.