THE FINANCE MINISTER AMA Muhith placed the budget for the FY 2017-18 in parliament on June 01, 2017. The salient features of the budget are its huge financial outlay and the deficit amount. The size of the budget is around BDT 4.00 trillion. The budget is as usual a deficit one. It has a deficit amount of BDT 1.12 trillion and deficit amount will be met by borrowing from domestic and foreign sources.
Since the budget is a huge one, the Finance Minister had to find out possible sources to meet budgeted expenditures. So he eyed on enhancing VAT and excise duty. Consequently, he proposed to increase VAT and excise duty on bank savings of small depositors. VAT was fixed at 15 per cent and excise duty slab and amount were enhanced which left a negative impact on small depositors. Bank deposit rate has plummeted recently as banks have got huge liquidity with comparatively fewer borrowers.
Against this backdrop, if the government imposes the proposed excise duty, the small depositors may feel discouraged to put their money in the banks. Instead they will be encouraged to invest their money in 'Destiny' like institutions with the hope of high returns and lose their way in the wilderness. Meanwhile, interest rates on national savings certificates also went down recently and the government is mulling over to lower the rate further. Under the circumstances, small depositors have nowhere to go. The middle class and lower middle class have been burdened with direct and indirect taxes and it is difficult for them to survive in the present condition. National budget should be middle class- and lower middle class-friendly. Imposition of a wide range of taxes will only shoot up the prices of essentials and make inflationary pressure moving.
Last but not least, the government has to ensure that budget money (peoples' tax money) is properly utilised and it is free from misuse and corruption.
Mohammad Zonaed Emran