Saturday, November 25, 2017

VAT deficit must be balanced to meet revenue target: Hasina

  • Senior Correspondent,
    Published: 2017-07-14 03:36:41 BdST


Prime Minister Sheikh Hasina has proposed to recover by any means the Tk 200 billion additional revenue income that the government says will now be lost due to the suspension of the new VAT law.

She has also urged the people to pay taxes regularly to offset the budget deficit and for further development.

She made the calls during her valedictory speech of the budget session of the 10th Parliament on Thursday in the backdrop of Opposition Leader Raushon Ershad's statements made earlier.

Last month, Finance Minister AMA Muhith had rolled out a Tk 4.26 trillion budget for fiscal 2017-18 with an initial plan for a 15 percent uniform VAT rate under the new law.

While it had a revenue target of Tk 2.88 trillion, the minister initially aimed to earn over Tk 910 billion from value-added tax or VAT.

The government had also estimated Tk 200 billion in additional income under the new VAT law.

But the proposal had triggered widespread criticisms that later prompted Hasina to suspend the law for two more years, keeping the existing multiple rates of VAT.

This will dent the plan to implement the new budget, which Raushon mentioned on Thursday.

Hasina said, "The opposition leader has said that revenue earning will take a hit. The damage is already done. The budget was made considering the VAT law and based on the possible income from mobile phone.

"Due to the suspension of the VAT law, Tk 200 million in revenue will not be collected and we'll have offset the deficit in any way possible."

Economists say the government will be forced to widen the tax net to meet the revenue shortfall and it will put more pressure on the National Board of Revenue.

Hasina said to balance the deficit in what she called ‘the biggest budget in the country's history’, the government will have to take bank loan or cut the development budget.

“We'll see how we can adjust."

She hoped that the government would be able to implement the Tk 1.53 trillion Annual Development Programme for FY2017.

The prime minister also said it is now a proven fact that there is freedom of speech because the ruling MPs have been able to criticise the budget, the finance minister and the government.

"Their criticisms led the finance minister to bring changes to the budget," she pointed out.

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