The government is set to bring some changes to the proposed budget for fiscal 2019-20, considering the welfare of middle class people, business community and capital market, finance ministry sources said. Prime Minister Sheikh Hasina is likely to explain the changes in the parliament on June 30 when the new budget will be passed.
The provisions incorporated in the proposed budget drew wide criticism and might be changed finally, they said. Finance Minister AHM Mustafa Kamal placed the Tk 523,190 crore-budget before the parliament on June 13. Ministry officials said, the changes would bring smiles to the faces of the middle class people and the businesses.
The prime minister in the last few years also brought changes to the proposed budget in order to make the consumers and businesses more satisfied. In the draft budget, the finance minister proposed increasing the source tax to 10 percent on savings tools from the existing 5 percent, which drew huge criticism as it could hurt the deposits of middle class people.
The government, taking this into cognizance, has decided to withdraw the additional source tax from this sector to release the people from tax burden. Economists, following announcement of the proposed budget said that this additional tax could directly hurt the middle class, especially the pensioners, and low-income depositors.
However, ministry sources said, it is yet undecided whether the tax is to be withdrawn from all types of savings tools or family-based and pensioners’ deposits. As it is yet undecided, the prime minister will make the final decision on the issue, they said. National Board of Revenue sources said, the 7 percent Value-added Tax, the proposed budget imposed on the social media based e-commerce business, might be reduced while being passed on June 30.
The finance minister in line with a move to expand the country’s tax net, made the Tax Identification Number (TIN) mandatory in the proposed budget for getting electricity connections in the residential holdings in the city corporation areas. NBR sources said, almost all residents in the city areas are wealthy, but do not pay tax. So the decision would help tax officials find huge potential taxpayers. However, the state minister for Power, Energy, and Mineral Resources Ministry requested the finance minister to review the decision.
Nasrul Hamid on Monday sent an official letter to the finance minister in connection with the issue. The power minister in his letter said, there are some 3.34 crore electricity subscribers in the country and mostly of them are poor. So it will be an inhuman decision to force them to submit TINs against their holding meters.
The government, considering the issue, backtracked from the decision of making TIN mandatory for the use of electricity, the finance ministry sources said. Though the government in the proposed budget for the upcoming fiscal offered a bunch of incentives to the stockholders of the country’s stock market, they were widely criticized for imposing tax on retained earnings and reserves.
In the proposed budget it was said, 15 percent tax will be imposed if retained earnings and reserve of any publicly traded company crosses 50 percent of its paid-up capital. The government, however, will finally withdraw this tax, the ministry officials concerned said. Economists after budget announcement, criticized this decision saying that it could intercept making wealth of the companies that could discouraged the others to be listed with capital market.
Besides, the government in order to encourage the listed companies to offer cash dividends to the general investors, imposed 15 percent tax on the profit of stock dividends in the proposed budget. Ministry sources said, this decision might also be changed in the conclusive budget. The new VAT law passed in the budget imposed 5 percent Advance Tax (AT) instead of Advance Trade VAT (ATV) on the import of capital machinery.
The business community said, this provision might hurt them seriously as they would have to take bank loan to pay this tax at the beginning of the year, finally hurting the consumers. That is why the government, on a special consideration, is set to withdraw AT not to pressurize the businesses and consumers, officials concerned said.