Banking commission by this month: Muhith

No tax burden in next budget

FE Report | Published: June 05, 2018 10:08:03 | Updated: June 05, 2018 21:42:31

FE file photo shows Finance Minister Abul Maal Abdul Muhith

Finance Minister AMA Muhith said on Monday the upcoming budget will see increase in taxes in a few areas as the national election looms.

"The new taxes are a very few. The rate of increase will also be very low," he said.

"That's a piece of welcome news for people."

Talking to reporters at his secretariat office, the minister ruled out the possibility of any immediate impact of the announcement of the fiscal blueprint on the market.

"… I would say that in the last ten years, after announcement of the budget, there had not been much impact on the market, and this will continue," the minister added.

Elaborating the budget features, Muhith said the corporate tax for cigarette and cellphone companies will remain unchanged at 45 per cent.

For other sectors, the highest rate will be 37.5 per cent.

"I have not touched those rates which are below 37.5 per cent. I have only reduced the high rates, the lower rates are not bad," he said.

Replying to a question as to how revenue collection will go up when tax is not enhanced, the minister said an increased number of people is now paying it.

The revenue collection will rise from this trend, he added.

He said the good news is a large number of young people are paying tax.

"Our target was 1.5 million to 2.0 million tax returnees. But now it has already crossed 3.3 million."

The minister said, the share of income tax in total revenue collection was 10 per cent in 1982.

Presently, income tax is the second-highest source of revenue income after Value Added Tax (VAT).

"My target is to increase the share of income tax to 50 per cent (of total revenue) in the next two to three years. It is now about 30 to 35 per cent."

Responding to a question, Muhith said customs duty will disappear over time.

"Our target from customs duty is not so high," he said.

Responding to another query, he said social media like Facebook has been brought under tax net in the next budget.

"Our neighbouring countries taxed them years back," he said.

The minister said the VAT system is most complicated.

"Our promise is we are not introducing the 2012 law now. We are still under 1991 VAT law because of the Prime Minister's promise."

Muhith said going forward, there will be three VAT rates, not a uniform VAT rate.

In the next budget, the VAT rate will remain five, but the ultimate goal is three tax rates -- low, middle and high, he added.

High rate is already imposed -- 15 per cent, the low and middle ones have not been determined yet, he noted.

Replying to another query, he said the biggest revenue is coming from VAT and it will continue.

Asked whether this budget would keep any special scope for legalising undisclosed money, the minister answered in the negative.

"No, No, No. The scope for black (undisclosed) money will not be given. Last year, no such chance was given too," he said.

Muhith said according to the income tax law, one can legalise undisclosed money by paying an additional 25 per cent tax and this will continue.

He said it made little difference to the scope for legalising undisclosed money.

"Last time only a negligible amount was legalised."

The minister said a bank commission will be set up by this month.

"The banking sector expanded a lot. It has both sides-good and bad," he said.

The last banking commission was set up in 2004.

Recommendations of such commissions were not fully implemented, he said.

Regarding CPD's comment on the banking sector, Muhith said: "It was nonsense. Nothing more can be said about it."

On Sunday, local think-tank the Centre for Policy Dialogue said Bangladesh's banking sector is an 'orphan' and the government is oppressing that orphan.

The minister hinted that the tax-free ceiling for individual taxpayers would remain unchanged in the coming budget.

"The level of tax collection was not changed last year, this year won't be changed, too," he said.

Regarding reviewing the yield rate of savings tools, the minister said he will have a meeting just after the budget.

"I will certainly reduce it. I will have to make it compatible with the market rate. It distorts the market," he said.

He said in the budget, he will speak about pension.

There will be some statements on some of the basic principles of the universal pension.

"What I am thinking is we shall begin experimenting on the pension," he said.

The basic principle is that it will be a contributory pension scheme, except for those who do not work and are dependent on the state, he noted.

Muhith said the organised private sector companies have been paying it. "Most of them have some kinds of pension."

He said at this moment the government can cover 0.8 million to 0.9 million people under the pension system.

"It's still a very small portion of the people of the country."

However, he said the social safety net covers a pretty large number of people.

Replying to another query, the minister said some Tk 4.0 billion will be allocated in the budget for the welfare of Rohingya people.

Muhith is scheduled to place a Tk 4.6 trillion budget in parliament Thursday.

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