Bangladesh Government Budget-2018

7/10/2018

Submit to
Dr. Muhammad Shahin Miah
Course Teacher
Income & Corporate Taxation
Department of International Business
University of Dhaka
 Bangladesh Government budget 2017-2018

Bangladesh Government budget 2016-2017

Finance Minister AMA Muhith on Thursday proposed the biggest-ever national budget of Tk 400266
cores for the fiscal year 2017-18 with an ambitious 7.4 percent GDP growth and 5.5 percent inflation.
 Budgetary change between 2016-2017 & 2017-2018 fiscal year

The size of budget for Fiscal year 2018 is Tk 59,661 crore or 17.52 percent higher than the budget size of
Tk 340,605 crore of the outgoing fiscal Fiscal Year 2017.

 Increase in taxes

The Bangladesh government plans to increase National Board of Revenue (NBR) collected taxes by 34.16% as per
the currently put budget for financial year 2017-18 in compared to the revised budget of 2016-17. This increased
amount of money is going to be directly imposed upon general businesses and individuals. It is understood that
generally businesses need to pay all the taxes in the categories mentioned in table 1. To achieve the increased goal
NBR will must impose more taxes in all aspects of the businesses.

Description Budget 2017-2018 Budget 2016-2017

Tax on Income & Profit 85,176 62,754
Value Added Tax(VAT) 91,254 68,675
Import Duty 30,023 21,571
Export Duty 44 33
Excise Duty 1599 1199
Supplementary Duty 38,401 29,519
Other Taxes & Duties 1690 1245
Total NBR tax 2,48,190 1,85,000

 Government dependency on bank loans will reduce private sector investment:

government is planning to borrow Tk 28,203 crore from banks and another Tk.32,149 crore from non-
bank domestic sources, which will reduce available fund for private sector investment. The government
will need to do this to cover huge budget deficit of Tk.112,276 crore. The deficit is more than 5% of the
GDP. Government is also planning to collect another Tk.51,924 crore from foreign sources to cover
gigantic budget deficit. All these loans will affect flow of capitals to the private sector hence the cost of
capital is likely to increase further.

 Increase of gas and electricity price:

The price for fuel and power is increasing two fold at the beginning of the financial year 2017-18 than last year.
Hike of the gas price is being effective and at the same time imposition of 15% VAT on gas and power price are
going to take the cost of fuel and power to a new peak. For many businesses like textile and clothing who operate on
very less profit margin, this rise may be devastating causing closure of many businesses. Government has set the
target of increasing non tax revenue and receipts by 96.6 percent. This increase is also likely to be imposed on
businesses and public as payments of bills of different services.

 Business activities are not increasing much:

A big budget is supposed to mean higher economic activities generating higher business opportunities. But the
structure of the budget 2017-18 doesn’t suggest the possibility of big boost in business activities than previous fiscal
year budget.Tk.153,331 cores has been kept for development activities which is 38.3 percent of total budget 400,266
cores. It shows that 61.7 percent of the budget is spent in non-development activities. Even the set amount for
development purpose many times remains unspent due to lack of efficiency in implementation of projects.
However the development budget for 2017-18 is 37.88 percent higher than the revised budget of the current fiscal
year. The non-development budget is rising by 21.19 percent. This should make sure higher flow of money and
more business activities.

But recent news of illegal money smuggling is putting question mark in that hope. It has been reported that USSD
61.63 billion has been siphoned out of Bangladesh in ten years between 2005 and 2014. Every year on an average
USD 6.16 billion is being sent out of the country illegally. The amount is more than 21.5% of countries RMG export
earnings of the year 2016.

 Lack of incentives for businesses: Major development funds are going to give big infrastructure projects
which has a good impact on business. However the implementation delay and allegation of corruptions in
such projects are key barriers in exerting benefit.Besides that no significant amount is being allotted for the
encouragement of industry and businesses. The garment industry being a low profit sector requires
continuous incentives schemes to tackle difficult situations. While competing country India allots big
funds for garment sector, Bangladesh is increasing more tax and VATs on them. According to the budget
2017-18 apparel exporters will have to pay 1% of their export earnings as source tax which was previously
0.7 percent.