Budget to get 26pc bigger, new VAT system might affect businesses

This year budget is likely to be Tk four lakh crore in size — which is 26 percent bigger than the one for the outgoing fiscal year, English language Daily Star reported.

The Finance Minister AMA Muhith will present the budget in parliament tomorrow.

The report said that the main challenge of the budget implementation will be the sourcing the huge additional revenue to foot the budget expenditures. It said that the Finance Minister depends the new VAT system to source the revenue. The report pointed out that the indirect form of taxation has direct bearings on the life and livelihood of every consumer.

Traders and the businesspeople have already expressed their concern about imposing a 15 percent flat value added tax (VAT) for all.

Economists and businessmen strongly oppose the government stance on VAT saying that this will push up commodity prices and add to the suffering of people.

A New Age report said that the government has set an ‘ambitious’ revenue mobilisation target for the National Board of Revenue for the upcoming fiscal year (2017-2018), envisaging the highest collection — Tk 87,887 crore — from value-added tax riding on the new VAT law.

The report said that the government anticipates getting around 35.50 per cent of the total tax collection target of Tk 2,48,190 crore from VAT as it expects a significant boost in VAT collection after implementation of the new VAT and Supplementary Duty Act-2012 from July 1 this year.

However, Finance Minister Mr. Muhith and NBR officials said that they would exempt many products used by the poorer section of people from the VAT net.

The finance minister also assured that they identified several goods for imposing supplementary duty so that the local industries are not affected.

He said that at the moment, out of the eight lakh business firms, only 32,000 pay VAT. He said that the government plans to increase the number to 50,000.