Staff Correspondent, bdnews24.com
Published: 2017-06-17 19:07:55 BdST
Khan, who served as a finance adviser to caretaker government, says that even finance ministry officials are not consulted on formulating the budget proposals, let alone ministers or lawmakers.
His remarks came on Saturday while speaking at a discussion on the new budget, organised by research organisation Centre for Policy Dialogue or CPD at Dhaka's Lakeshore Hotel.
The discussion styled 'CPD Budget Dialogue 2017' was also joined by Planning Minister AHM Mustafa Kamal, State Minister for Finance MA Mannan and former commerce minister Amir Khosru Mahmud Chowdhury.
On June 1, Finance Minister AMA Muhith unveiled a Tk 4 trillion budget for fiscal 2017-18 in parliament, which he claimed to be the 'best' among the 11 he had proposed.
"The MP and ministers have no roles in formulating the budget, not even the parliamentary standing committees," said Khan, who retired as the cabinet secretary.
A new tax proposal is not even discussed at the finance ministry, said the former finance secretary.
"The finance minister prepares the budget according to the prime minister's instruction. Since there's no participation of lawmakers it's tough to implement it."
Budget implantation has been long an issue for analysts, but this time the size of the budget has emerged as an issue of particular concern.
Khan said financing and implementing the big budget was the major challenge.
The foreign currency reserves may take a hit due to debt financing, he said.
Khan blamed a lack of good governance for sluggish foreign assistance which will put pressure on the reserves.
"Uniform 15 percent VAT and a hike in excise duty on bank deposits at the same time are not appropriate at all."
Refinancing state banks every year is not a solution, said the former bureaucrat advising privatisation of government lenders.
In his budget proposal, Finance Minister Muhith said the
uniform VAT rate would be 15 percent for next three years, but he did not
clearly mention whether rate would be changed or brought down afterwards.
The supplementary duty has been kept on most products in the name of domestic industry protection.
In a report, the CPD said: "Consumers’ interests have been sacrificed."
The CPD compared it to an attempt to collect revenue from all ‘low-hanging fruits’.
An increased VAT rate on major items may lead to higher inflation, the CPD said.
As the VAT rate will go up from 5 percent to 15 percent on electricity services , consumers will have to pay higher utility fees for power consumption unless unit prices are adjusted, according to the CPD.
Gas prices have just increased and it will further exacerbate the consumers' burden, it said.