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Monday, 25 September 2023
Budget Reaction: The proposed budget will contribute to reducing living costs and auto stabilization

Budget Reaction: The proposed budget will contribute to reducing living costs and auto stabilization

Professor Dr. Md. Salim Uddin

The eminent educationist of the country said that the budget was announced at a time when the entire world is struggling to recover the economy damaged by the corona epidemic.

This situation has been made more complicated by the prolonged war between Russia and Ukraine. The economic indicators of Bangladesh have fallen into the face of challenges due to the impact of these adversities.

He said that the country's inflation rate, dollar crisis, continued pressure on reserve, instability in the currency exchange rate as well as foreign sector imports, exports and expatriate income etc. indicators are becoming increasingly sensitive.

Dr. Salim said the highest priority has been given to bringing back relief in the cost of living as well as establishing stability in the economy in the proposed budget. He also said that the budget aims to realize the dream of establishing a happy, prosperous and smart Bangladesh by 2041.

He said that the size of the announced budget is Seven lakh Sixty one thousand seven hundred and eighty five crores which is the biggest ever in Bangladesh.

In the proposed budget, inflation and GDP growth targets have been set at 6 to 7 percent and 7.5 percent respectively. To implement this proposed budget the total potential income has been estimated at Five lakh Three thousand Nine Hundred Crore.

Referring to the issue of income-expenditure deficit of two lakh Fifty seven thousand Eight Hundred Fifty crores in the proposed budget Dr. salim provides information about its resources and sector-wise allocation of this Budget.

In this regard Dr. Salim Uddin commented that the proposed budget will be implemented by two governments, so each issue of the budget, allocated sector, implementation strategy, government's vision, dream, handling the global economic situation etc has been given different importance.

Discussing the various positive aspects of the proposed budget for the financial year 2023-24 and Dr. Salim said that many good and quality features will be seen in this budget. Among those preventing inflation, continuing the growth of GDP, harmonizing currency and finances, reducing balance of payment deficit, protecting domestic industries, diversifying exports, rationalizing tax administration for the purpose of economic stability are notable.

According to Dr. Salim the proposed budget has introduced significant changes in direct taxes. For example, the proposal to improve the income tax exemption limit from Tk 3 lakh to Tk 3.5 lakh which has been increased from Tk 3.5 lakh to Tk 4 lakh for senior citizens including women and the income tax limit has been increased to Tk 25 thousand in other cases.

While the minimum tax has remained unchanged, a minimum tax of Two Thousand taka has been imposed. In terms of asset surcharge, the total assets have been increased from 3 crore to 4 crore and the owner of assets above 4 crore will be charged a surcharge of 10 per cent and above 50 crore will be charged a surcharge of 35 per cent.

These tax rate changes will provide relief to low income people and tax culture by paying a minimum tax of tk 2000bwill have an indirect role in expanding the tax net participating in government public welfare and Wealth. Tax reform will bring financial relief to the middle class and a higher surcharge on the wealth of rich citizens will help reduce income inequality.

Dr. Salim also said according to the information of the National Board of Revenue only 31 lakh and seventy thousand individuals and organizations have filed returns till April this year though there are 88 lakh e-TIN holders in the country.

In order to increase this number, submission of proof of return submission has been made mandatory for availing some new government services. Besides, policy will be made for TRP. These steps will increase tax coverage and establish transparency in tax administration and professionalism in tax services.

To reduce the living cost of the people, protect domestic industries, protect import substitute industries, encourage exports, normalize and increase the production and supply of products, increase investment in ICT and other industries along with relief in product prices to the lower and middle classes, tariffs on various types of products in the budget has been nationalized and exempt or impose taxes and duties has been proposed.

Meat, domestic LED bulbs, switch sockets, sweets, elite clothing, e-commerce delivery charges etc. are notable in the list of duty free price cuts. This will benefit agricultural facilitation and the domestic electronics industry. Tariffs on elite clothing have been reduced which will have a positive impact on the textile industry.

He also pointed out that the imposition of VAT on some daily use items such as pens, toilet tissue, mobile phones etc. will increase the living cost and will go against the main objective of the budget to prevent inflation.

Dr. Salim mentioned that significant allocations have been made for social safety nets, subsidies, agriculture, health i.e. sectors that will protect low-income people, small and medium industries in the proposed budget. He also mentioned that the scope of food security and food programs will increase in the budget. Dr. Salim said the scope of selling products at low prices in the open market has been increased to provide relief from inflation.

Salim expressed his opinion that the proposed budget mentions many strategies for curbing inflation and revenue collection but for bringing economic stability, rise in commodity prices despite falling commodity prices in the international market, pressure on internal sources to finance the deficit i.e. dependence on bank loans, significant dynamic strategy of tax administration, increase in reserves, stability of exchange rates, import of capital equipment and raw materialsIt is necessary to mention the strong role in the budget on various contemporary conditions including maintaining the fuel supply in the industry and continuing the production business.

Finally Dr. Salim said that the success of this budget will depend on its implementation and revenue collection should be taken as a priority Mega Project.

The writer is a FCA, FCMA, Professor, Accounting Department, University of Chattogram and Chairman, Bangladesh House Building Finance Corporation (BHBFC) and The Chairman of the Executive committee of Islami Bank Bangladesh Limited (IBBL).

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