Dhaka: Amid growing pressure from within and outside the government, finance minister AMA Muhith yesterday said that the government is discussing the possibility of reducing the excise duty on bank deposits and the uniform 15 per cent value added tax (VAT) proposed in the national budget for FY2017–18.
“Prime Minister Sheikh Hasina will disclose the new excise duty and VAT rates in parliament on 28 June,” he said hinting at a revision of his proposal, while talking to journalists at the Secretariat. The finance minister, who was uncompromising about any reduction in the proposed excise duty on banks and uniform VAT rate, soften his stance amid widespread criticism from different quarters even from within his ruling Awami League.
In the latest of a series of discussions in parliament since the placing of his budget on June 1, Muhith faced a barrage of criticism from MPs yesterday.
Opposition MPs went as far as to ask him to step down while a Jatiya Party lawmaker even demanded pressing ‘criminal charges' against him.
On Monday, some ruling party members came down heavily on the finance minister for imposing excise duty on bank accounts and unified 15 per cent VAT.
AL Presidium Member Sheikh Fazlul Karim Selim MP was in the frontline saying, “Stop your stubbornness and talk less… We don’t want the whole nation to carry a bad impression about
Awami League for collecting more revenue from the excise duty.”
Several other AL MPs including Mahbubul Alam Hanif and Abul Kalam Azad, former information minister, also slammed the finance minister and demanded withdrawal of the excise duty and reduction of uniform VAT rates.
Almost all major political parties, including the BNP, economists and the common people also criticized Muhith and were demanding withdrawal of the excise duty on bank deposits and reduction of the unified VAT rates.
During his budget speech on June 1, Muhith had proposed raising the excise duty to Tk 800 from Tk 500 if the account balance — whether debit or credit — exceeded Tk 1 lakh, but did not cross Tk 10 lakh.
Similarly, an excise duty of Tk. 2,500 would be imposed instead of the existing Tk. 1,500 if the balance exceeded Tk. 10 lakh, but did not exceed Tk. 1 crore. As much as Tk. 12,000 would be imposed instead of the existing Tk. 7,500 if the balance exceeded Tk. 1 crore, but did not exceed Tk. 5 crore.
Moreover, Tk. 25,000 would be imposed instead of the existing Tk. 15,000 if the balance exceeded Tk. 5 crore.
According to the calculation of the National Board of Revenue (NBR), revenue collection will decline by Tk 4,000 crore if the government reduces VAT by 1 per cent. Lead economist at the World Bank (WB), Dr Zahid Hussain, said a reduction in the VAT rate would affect the revenue target. However, consumers will be benefited and the inflationary pressure will ease, he pointed out. So, the government will have to manage these funds either by domestic borrowing or from other sources, he said. The NBR estimated revenue collection of Tk 287,991 crore (13 per cent of GDP) for FY 2017–18. Out of this, Tk. 248,190 crore (11.2 per cent of GDP) will come from NBR sources.
Also, Muhith said in his budget speech that the target of non-NBR tax revenue collection has been fixed at Tk. 8,662 crore (0.4 per cent of the GDP) for FY 2017–18. “The target of non-tax revenue collection has been set at Tk. 31,179.crore (1.4 per cent of the GDP).
