Revenue earning holds key

Finance Minister AMA Muhith placed a Tk 2.95 trillion annual budget for 2015-16 fiscal on Thursday, aiming for a quantum jump in revenue collections by widening the tax net and levying taxes on a whole new range like online trading and mobile phone use.
The budget projects a 7 per cent GDP growth and seeks to keep inflation below 6.2 per cent. But the octogenarian finance minister surprised many by not targeting tobacco products that face ever increasing taxation not only in developed countries but also in neighbouring India and China.
As a result, cigarettes will cost less, bidis just as much as before. So would chocolates and biscuits. Different kinds of garments like shirts and pyjamas would also cost less but garment exports will be taxed more at source. Using a mobile phone would be more expensive, if not buying one, because of taxes on RIM and SIM cards.
Online trading will be taxed at source, so buying anything online will be costlier than before. Imported foods and vehicles will cost more, as would services in beauty parlours.
Muhith's revenue target of Tk 2.14 trillion is ambitious. The NBR will collect more than Tk 1.82 trillion, of which 60 percent will come from VAT alone.
Muhith targets three million people in the tax net within the term of his government against the mere 1.1 million taxpayers who now pay up. To cover the considerable deficit, Muhith proposes to borrow Tk 385 million from the banks. But the corporate tax rates have been slashed to cheer up the industry. The tax ceiling on dividend income has been raised to impact the stock markets positively.
The defence budget has been slashed marginally in percentage but not in gross terms – down to 6.2 per cent of the total outlay against 6.6 per cent in the 2014-15 budget. "That won’t affect modernisation of the forces in terms of weaponry or training," Muhith assured Parliament as he placed the budget proposals. He has also sought to expand the social safety net, covering more old age, disabled and disadvantaged women by government subsistence allowances, according to bdnews24.com.