Major reforms to come for earning confidence of taxpayers
Friday, 8 June 2007
FE Report
Finance Adviser A.B. Mirza MD. Azizul Islam unveiled Thursday a Tk 871.37 billion national budget for the fiscal 2007-08, setting priority for controlling inflation, stepped-up growth of agricultural sector, expansion of education facilities and promotion of rural development.
The proposed budget will include Tk 75.23 billion provided for meeting the accumulated liabilities of the Bangladesh Petroleum Corporation (BPC).
The budget deficit for the forthcoming fiscal has been estimated at 5.6 per cent of the gross domestic product (GDP) under the proposed budget, up from 3.7 per cent of the GDP under the revised budget for fiscal 2006-07.
Two per cent of the projected budget deficit in the upcoming fiscal will be financed from external sources while the remaining 3.6 per cent, from domestic sources.
The proposed budget projects a total expenditure of Tk 796.14 billion, leaving an overall deficit - excluding external grants and the BPC's liabilities - of Tk 223.13 billion for the next fiscal.
Announcing the proposed budget, the finance adviser said: "Assured resource mobilisation from domestic sources is one of the preconditions for attaining economic sovereignty by a developing country like Bangladesh."
He emphasised the need for building total quality management in tax regime through reforms and for earning the confidence of taxpayers.
"Formulation of a new law and separation of tax policy from tax administration to build a transparent and simplified tax regime in the country are under consideration," he said.
The proposed budget has estimated a 25 per cent rise in overall government expenditure over the amount shown in the original budget of the outgoing fiscal of Tk 679.40 billion that has been lowered to Tk 668.36 billion under the revised budget for the fiscal 2006-07.
Total earnings of the government in the forms of tax revenue to be collected by the National Board of Revenue (NBR), non-NBR tax revenue, non-tax revenue and external grants have been estimated at Tk 615.56 billion for fiscal 2007-08. The amount includes NBR tax revenue Tk 438.50 billion, non-NBR tax revenue Tk 19.88 billion, non-tax revenue receipts of Tk 114.63 billion and foreign grants worth Tk 42.55 billion. The revenue collection target for the forthcoming fiscal has been set 16 per cent higher than the receipts shown in the revised budget for fiscal 2006-07.
The proposed budget will target at raising domestic borrowing of the government, from both banking and non-banking sources to Tk 192.76 billion from Tk 100.31 billion under the revised budget for fiscal 2006-2007. The net external borrowing of the government has been estimated at Tk 63.05 billion under the proposed budget compared to Tk 51.83 billion under the revised budget for fiscal 2006-07.
Meanwhile, the external debt amortisation for the upcoming fiscal has been projected at Tk 40.98 billion against Tk 38.65 billion under the revised budget for fiscal 2006-07. Repayment of domestic debt or amortisation from both banking and non-banking sources will involve Tk 214.02 billion in the upcoming fiscal against Tk 199.15 billion under the revised budget for fiscal 2006-07.
In addition, interest payments on account of both external and domestic borrowings have been estimated at Tk 107.85 billion -- Tk 13.21 billion on external loans and Tk 94.64 billion on domestic debt. The revised budget for fiscal 2006-07 shows the amount of such interest payments at Tk 91.54 billion -- Tk 13.00 billion on foreign loans and Tk 78.54 billion on domestic borrowings.
Expenditure on physical infrastructure development will account for 34.4 per cent of total budget, proposed for fiscal 2007-08. The shares of social infrastructure, public administration, interest payments of public debt and net lending have been projected at 34.3 per cent, 19.3 per cent and 12 per cent respectively.
Fifty seven per cent of the proposed aggregate budget, non- development and development combined, will be spent on programmes directly or indirectly relating to poverty reduction and 10.6 per cent of the total budget will be spent for social empowerment and safety net programmes.
The finance adviser expected that higher that the revenue earnings would increase by Tk 65.91 billion in the next fiscal over the current fiscal's revised budget.
Of the total outlay, 51.1 per cent will come from tax revenue income, 14.4 per cent from non-tax revenue, 14.8 per cent from domestic financing and 13.2 per cent from foreign loans and grants.
The proposed budget for 2007-08 includes an Annual Development Programme (ADP) worth Tk 265 billion, which is 5.0 per cent of the GDP.
The recorded budget speech of Finance Adviser Azizul Islam was simultaneously aired by Bangladesh Betar and Bangladesh Television (BTV) from 3pm to 5pm. Private radio and TV channels carried on the feed from Betar and BTV.
The caretaker government announced the budget in absence of parliament and it will be adopted through an ordinance after accommodating suggestions and recommendations from expert bodies and citizens.
"From this moment, any one can send his suggestions or proposals through e-mail or by surface mail from any corner of the country. All proposals or suggestions received by 14 June will receive our due considerations. We will incorporate all relevant issues and by the last week of this month we will finalise the budget with the approval of the Hon'ble President of the Republic," the finance adviser noted this while announcing the proposed budget for fiscal 2007-08.
Main sources of revenue in the current fiscal's budget were customs duty, income tax and value added tax, the finance adviser said.
In his budget speech the finance adviser forecast a 7.00 per cent growth in gross domestic project (GDP) for the fiscal 2007-08. Average inflationary rate is expected to come down to 6.5 per cent from 7.0 per cent in the current fiscal, he added.
Of the total tax revenue, Tk 438.50 billion has been projected to come through the National Board of Revenue (NBR) while Tk 19.88 billion from non-NBR sources. Besides, Tk 114.63 billion is estimated to come as non-tax revenue.
Of the total NBR portion, Tk 158.90 billion has been estimated to come from Value Added Tax (VAT), Tk 93.54 billion from import duty and Tk 71.68 billion from supplementary duty.
Total foreign assistance was expected at Tk 146.58 billion, of which Tk 104.03 billion as credit and Tk 42.55 billion as grants.
The finance adviser has proposed not any significant fresh tax load while making some adjustments in rates in a number of areas. He has expressed the hope to collect Tk 458.30 billion by expanding the tax net and other measures. The amount is Tk 65.91 billion higher than that of the current fiscal year.
The education and technology sector has been given the highest allocation of Tk 123.69 billion in the combined revenue and development budget, which is 13.49 per cent higher than that under revised one. During the next fiscal, about 15,000 primary teachers will be recruited of which 60 per cent will be females and 10,000 teachers will be trained.
Total allocation for agricultural subsidy was proposed at Tk 22.50 billion-Tk 7.50 billion as diesel subsidy and Tk 15 billion as fertiliser subsidy. The finance adviser has also proposed Tk 11 billion in export subsidy for 2007-08 fiscal.
In the development budget, the highest allocation of Tk 61.65 billion has been proposed for the local government and rural development, followed by Tk 45.57 billion for fuel and energy, Tk 41.06 for transport and communication, Tk 37.08 for education and technology, Tk 26.06 for health, Tk 22.23 billion for agriculture, Tk 12.64 billion for public services and Tk 8.18 billion for social security and welfare.
Finance Adviser A.B. Mirza MD. Azizul Islam unveiled Thursday a Tk 871.37 billion national budget for the fiscal 2007-08, setting priority for controlling inflation, stepped-up growth of agricultural sector, expansion of education facilities and promotion of rural development.
The proposed budget will include Tk 75.23 billion provided for meeting the accumulated liabilities of the Bangladesh Petroleum Corporation (BPC).
The budget deficit for the forthcoming fiscal has been estimated at 5.6 per cent of the gross domestic product (GDP) under the proposed budget, up from 3.7 per cent of the GDP under the revised budget for fiscal 2006-07.
Two per cent of the projected budget deficit in the upcoming fiscal will be financed from external sources while the remaining 3.6 per cent, from domestic sources.
The proposed budget projects a total expenditure of Tk 796.14 billion, leaving an overall deficit - excluding external grants and the BPC's liabilities - of Tk 223.13 billion for the next fiscal.
Announcing the proposed budget, the finance adviser said: "Assured resource mobilisation from domestic sources is one of the preconditions for attaining economic sovereignty by a developing country like Bangladesh."
He emphasised the need for building total quality management in tax regime through reforms and for earning the confidence of taxpayers.
"Formulation of a new law and separation of tax policy from tax administration to build a transparent and simplified tax regime in the country are under consideration," he said.
The proposed budget has estimated a 25 per cent rise in overall government expenditure over the amount shown in the original budget of the outgoing fiscal of Tk 679.40 billion that has been lowered to Tk 668.36 billion under the revised budget for the fiscal 2006-07.
Total earnings of the government in the forms of tax revenue to be collected by the National Board of Revenue (NBR), non-NBR tax revenue, non-tax revenue and external grants have been estimated at Tk 615.56 billion for fiscal 2007-08. The amount includes NBR tax revenue Tk 438.50 billion, non-NBR tax revenue Tk 19.88 billion, non-tax revenue receipts of Tk 114.63 billion and foreign grants worth Tk 42.55 billion. The revenue collection target for the forthcoming fiscal has been set 16 per cent higher than the receipts shown in the revised budget for fiscal 2006-07.
The proposed budget will target at raising domestic borrowing of the government, from both banking and non-banking sources to Tk 192.76 billion from Tk 100.31 billion under the revised budget for fiscal 2006-2007. The net external borrowing of the government has been estimated at Tk 63.05 billion under the proposed budget compared to Tk 51.83 billion under the revised budget for fiscal 2006-07.
Meanwhile, the external debt amortisation for the upcoming fiscal has been projected at Tk 40.98 billion against Tk 38.65 billion under the revised budget for fiscal 2006-07. Repayment of domestic debt or amortisation from both banking and non-banking sources will involve Tk 214.02 billion in the upcoming fiscal against Tk 199.15 billion under the revised budget for fiscal 2006-07.
In addition, interest payments on account of both external and domestic borrowings have been estimated at Tk 107.85 billion -- Tk 13.21 billion on external loans and Tk 94.64 billion on domestic debt. The revised budget for fiscal 2006-07 shows the amount of such interest payments at Tk 91.54 billion -- Tk 13.00 billion on foreign loans and Tk 78.54 billion on domestic borrowings.
Expenditure on physical infrastructure development will account for 34.4 per cent of total budget, proposed for fiscal 2007-08. The shares of social infrastructure, public administration, interest payments of public debt and net lending have been projected at 34.3 per cent, 19.3 per cent and 12 per cent respectively.
Fifty seven per cent of the proposed aggregate budget, non- development and development combined, will be spent on programmes directly or indirectly relating to poverty reduction and 10.6 per cent of the total budget will be spent for social empowerment and safety net programmes.
The finance adviser expected that higher that the revenue earnings would increase by Tk 65.91 billion in the next fiscal over the current fiscal's revised budget.
Of the total outlay, 51.1 per cent will come from tax revenue income, 14.4 per cent from non-tax revenue, 14.8 per cent from domestic financing and 13.2 per cent from foreign loans and grants.
The proposed budget for 2007-08 includes an Annual Development Programme (ADP) worth Tk 265 billion, which is 5.0 per cent of the GDP.
The recorded budget speech of Finance Adviser Azizul Islam was simultaneously aired by Bangladesh Betar and Bangladesh Television (BTV) from 3pm to 5pm. Private radio and TV channels carried on the feed from Betar and BTV.
The caretaker government announced the budget in absence of parliament and it will be adopted through an ordinance after accommodating suggestions and recommendations from expert bodies and citizens.
"From this moment, any one can send his suggestions or proposals through e-mail or by surface mail from any corner of the country. All proposals or suggestions received by 14 June will receive our due considerations. We will incorporate all relevant issues and by the last week of this month we will finalise the budget with the approval of the Hon'ble President of the Republic," the finance adviser noted this while announcing the proposed budget for fiscal 2007-08.
Main sources of revenue in the current fiscal's budget were customs duty, income tax and value added tax, the finance adviser said.
In his budget speech the finance adviser forecast a 7.00 per cent growth in gross domestic project (GDP) for the fiscal 2007-08. Average inflationary rate is expected to come down to 6.5 per cent from 7.0 per cent in the current fiscal, he added.
Of the total tax revenue, Tk 438.50 billion has been projected to come through the National Board of Revenue (NBR) while Tk 19.88 billion from non-NBR sources. Besides, Tk 114.63 billion is estimated to come as non-tax revenue.
Of the total NBR portion, Tk 158.90 billion has been estimated to come from Value Added Tax (VAT), Tk 93.54 billion from import duty and Tk 71.68 billion from supplementary duty.
Total foreign assistance was expected at Tk 146.58 billion, of which Tk 104.03 billion as credit and Tk 42.55 billion as grants.
The finance adviser has proposed not any significant fresh tax load while making some adjustments in rates in a number of areas. He has expressed the hope to collect Tk 458.30 billion by expanding the tax net and other measures. The amount is Tk 65.91 billion higher than that of the current fiscal year.
The education and technology sector has been given the highest allocation of Tk 123.69 billion in the combined revenue and development budget, which is 13.49 per cent higher than that under revised one. During the next fiscal, about 15,000 primary teachers will be recruited of which 60 per cent will be females and 10,000 teachers will be trained.
Total allocation for agricultural subsidy was proposed at Tk 22.50 billion-Tk 7.50 billion as diesel subsidy and Tk 15 billion as fertiliser subsidy. The finance adviser has also proposed Tk 11 billion in export subsidy for 2007-08 fiscal.
In the development budget, the highest allocation of Tk 61.65 billion has been proposed for the local government and rural development, followed by Tk 45.57 billion for fuel and energy, Tk 41.06 for transport and communication, Tk 37.08 for education and technology, Tk 26.06 for health, Tk 22.23 billion for agriculture, Tk 12.64 billion for public services and Tk 8.18 billion for social security and welfare.