Higher source tax on RMG export proceeds likely

Finance Minister AMA Muhith hinted at raising the existing rate of tax collected at source on export proceeds of the apparel sector as he Friday consulted the development researchers of a public sector think-tank on the upcoming budget fundamentals.
"This is high time to realise more revenues from the country's largest export-earning sector. A large amount of revenue will come if the existing tax at source on export receipts is fixed at 0.8 per cent from the existing 0.3 per cent," he said.
Mr Muhith was speaking as the chief guest at a budget discussion organised by the state-owned BIDS at its office in the city at the height of the pre-budget consultation process.
The Bangladesh Institute of Development Studies (BIDS) organised the discussion styled 'Budget-2015-16: selected analytical studies'.
Senior secretary of the finance division Mahbub Ahmed, senior researchers of the BIDS, senior academics and economists took part in the discussion with BIDS director-general Dr KAS Murshid presiding.
BIDS senior research fellow Dr Monzur Hossain presented a paper on inflationary impact on households: implications for the budget. Another senior research fellow, Dr Nazneen Ahmed, presented a paper on fiscal incentives for export industries: lessons for the coming budget.
Senior research fellow Mohammed Yunus presented a keynote on revenue mobilisation and grants to municipalities while researcher Dr Abul Basher made a presentation on financing for the fiscal year 2016: a comprehensive approach.
The finance minister further said the capacity for implementing donor-funded project still remained low although it has increased much.
He mentioned the aid lying in the pipeline was more than worth US$20 billion "but we can use just more than $4.0 billion a year".
Speaking on one of the key hurdles to investment, Mr Muhith said gas crisis would be resolved after installation of the LNG terminal.
"We're expecting a deal to be signed on the matter sometime in July," he told the meet.
Defending the big budget he has outlined, Mr Muhith said the government has been raising the size of the budget each year mainly to raise its tax-GDP ratio. Speaking at the meeting, senior secretary Mahbub Ahmed said the government would review the subsidy allocation.
"We're going to rationalise subsidy allocation and, possibly, there will be changes in the distribution and measures to avoid its abuses," the top finance official said.
    jasimharoon@yahoo.com