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Taka 99,962 crore national budget: Overall deficit Tk 24,234 crore, poverty reduction, price stabilisation, social safety net expansion, key goals

Mirza Azizul Islam

Staff Reporter

A Taka 99,962 crore national budget, with an overall deficit of Taka 24,234 crore, for fiscal 2008-09 was announced by Finance Adviser Mirza Azizul Islam through radio and television yesterday.

The 54-page budget speech is reflective of the tight rope he had to walk on while preparing the annual national statement of income and expenditure. Unprecedented price hike both in international and domestic markets created problems that were exacerbated by repeated natural disasters during the current fiscal (2007-08).

It is therefore only natural that apart from the goals of macro-economic stability, acceleration of growth and poverty reduction, priority has been given to keeping prices at affordable levels, expansion of the social safety net, and food security, among others.

The fiscal measures proposed seek to increase revenue earnings marginally from Taka 60,539 crore shown achieved in the revised budget for the current year to Taka 69,382 crore in next fiscal. Another compromise made was reduction of size of the Annual Development Programme by Taka 900 crore from the current year's original budget estimate of Taka 26,500 crore.

The Finance Adviser was candid in his statement of the adverse situation he faced both internally and externally, and despite increase of size of the budget speech by about 50 per cent over last year's he had little space to spare to profess through it the philosophy and ideals of the government.

Of the total resources the Finance Adviser seeks to mobilise, 54.5 per cent would come from tax revenue, 12.6 per cent from non-tax revenue and 2.3 per cent from non-NBR tax revenue. Foreign loans and domestic borrowing to form 24.2 per cent of the resources and foreign grants another 6.4 per cent.

Of the tax revenue of Taka 54,500 crore, 37.1 per cent is expected to come from value added tax (VAT), 19.9 per cent from import duty, 24 per cent from income tax and 15.5 per cent from supplementary duty.

Education, and information and communication technology gets the highest budgetary allocation of 12.3 per cent followed by 11.3 per cent earmarked for the energy and power sector, 9.1 per cent each for agriculture and public administration, 8.2 per cent for social security and welfare, 7.3 per cent for local government and rural development, 6.4 per cent for defence, 6.1 per cent for transport and communication, 5.9 per cent for health, 5.6 per cent for public order and security.

However, debt servicing takes the largest single chunk (12.6 per cent) of budget resources, official papers show.

Mirza Azizul Islam said that an all-out agricultural rehabilitation plan and steps taken to expand trade and investment activities helped overcome the negative effects of the adverse situation as Boro rice output stood at 175 lakh tones. The rate of the growth of Gross Domestic Product thus has been estimated at 6.2 per cent. Next year the GDP growth rate would be 6.5 per cent if the economy did not suffer major natural disasters, he said.

Due to production loss of food grains and increase of import prices the public life was under strain. And in December inflation shot up to 11.6 per cent which, the adviser said, has started coming down. He was optimistic that next year the inflation would come down to nine per cent.

During the current year the overall expenditure of the government increased from an estimated Taka 79,614 crore to Taka 86,085 crore with an overall deficit of Taka 28,679 crore. The deficit is being met with soft term foreign loan and domestic borrowing. In addition mobilised Taka 7,523 crore by issuing treasury bonds to pay for the accumulated loss of the Bangladesh Petroleum Corporation.

Imports increased by 25 per cent due to large scale import of foodgrains. Export earnings growth has been estimated at 15 per cent. The growth of remittance was 31.5 per cent during the July-April period compared to that of the preceding year. Thus the current account of balance of payments recorded a surplus of US 39 crore dollars, the Finance Adviser said.

The fiscal measures include retention of the current year's tax exempt income limit, however increasing the same to Taka 1.65 lakh for taxpayers who are women or above the age of 70 years. For those relying wholly on agricultural income the limit has been increased to Taka two lakh and 2.15 lakh respectively.

Corporate income tax has been reduced although tax on dividend income has been raised. Losing companies would not have to pay tax on the basis of turnover, the taxation proposals say.

The Adviser has proposed to reduce import duty on capital machinery and raw materials. Small and Medium Enterprises (SMEs) would enjoy tax holiday, while income from computer software, data processing, data entry and call centres will remain tax-free till June 2011.

The threshold base for value added tax has been increased from Taka 20 lakh to Taka 24 Lakh while the limit for collection of income at sources from house rent had been increased from Taka 15,000 to Taka 20,000. To discourage import of luxury transports and encourage the import of automobiles used for carrying industrial raw materials and passengers, import duties have been adjusted.

To increase the tax base another opportunity had been given to whiten black money from July to October this year by paying tax at the existing rates and seven per cent penalty on payable tax.

The Finance Adviser had proposed to withdraw the tax exempt income benefit enjoyed by all foreign technicians.

The budget proposes to enhance the old age allowance, injured freedom fighters allowance and the same for poor disabled people, expand maternity allowance and create lean time job opportunities in rural areas. It also makes provision for balanced regional development by making special allocations for backward and ultra poor areas.

The government would be open to suggestions that would be offered to improve the proposals made in the budget through e-mail or letters. Suggestions received till 16 June would be considered with all seriousness, Mirza Azizul Islam said.

Aug 21 grenade attack on AL rally: Chargesheet by Wednesday

Staff Reporter

Inspector General of Police (IGP) Noor Mohammad yesterday said the chargesheet in the August-21 grenade attack on an Awami League rally will be submitted by June 11.

"The chargesheet will be submitted by Wednesday as all the formalities in this regard have been completed," IGP told the reporters at a press briefing at the Police Headquarters.

While asked about the number of accused in the chargesheet, he replied that everyone would be informed about it after submission of the chargesheet.

The grenade attack on the Awami League rally at Bangabandhu Avenue on August 21, 2004 left 24 leaders and activists of the party killed and some 300 injured, including party President Sheikh Hasina.

About the recent drive against illegal arms holders and terrorists, IGP said, "The special drive was not intended to harass or arrest politicians. Those arrested during the last few days were held on specific charges and allegations."

"The law-enforcing agencies arrested a total of 20,002 people across the country till yesterday under the special drive that started on May 28. The arrest figure was 16,138 during the same period last year," said Noor Mohammad.

"The law-enforcing agencies are arresting some 1,667 people on average each day in the ongoing drive. Usually, 1,345 people are arrested everyday," he said.

The area-wise charts of listed criminals are being updated aiming to hold the upcoming general election peacefully, he added.

Stage set for Hasina’s release, Tarique’s bail petition rejected

Sheikh Hasina

Tarique Rahman eldest son of detained former PM
Khaleda Zia, being carried to the special court at
Sher-e-Bangla Nagar on a stretcher yesterday for hearing on
the bail petition. NN photo

Staff Reporter

Former Prime Minister Sheikh Hasina will be released on Government order at any moment for medical treatment, abroad as three separate Courts yesterday exempted her from personally appearing in hearings in four graft cases against her.

Earlier, a High Court Division Bench stalled the proceedings of the 'extortion' case filed by Azam J Chowdhury against Sheikh Hasina, while police yesterday returned three of her passports to her lawyer and relatives on an order of the Chief Metropolitan Magistrate.

With the exemption from personal appearance in four cases and the executive order for her release all legal impediments will be cleared from the way for her journey overseas, senior jurists told The New Nation yesterday evening.

Sheikh Hasina, the President of Awami League (AL), facing trial in five separate corruption cases since her arrest on July 16 last year, will be released temporarily by an executive order under Section 401(4A) of the Code of Criminal Procedure (CrPC) following hectic negotiations between senior leaders of her party and policymakers of the Government, informed sources said.

One of her top counsel, Barrister Shafique Ahmed and a Chief Public Prosecutor (CPP) Advocate Sharfuddin Khan Mukul told this Correspondent that the trial of the graft cases against the former Prime Minister would continue in her absence, as she would be abroad.

In the meantime, BNP Secretary General Khandaker Delwar Hossain, in a press briefing yesterday, demanded unconditional release of the other detained former Prime Minister and BNP Chairperson Begum Khaleda Zia for her medical treatment in the country.

He urged the Government to send his party chief's both the ailing imprisoned sons-Tarique Rahman and Arafat Rahman Koko-abroad for medical treatment "instead of ruminating over Begum Zia's denial to leave the country".

Earlier in the morning, a Special Court rejected the bail petition of Tarique Rahman in Bashundhara Group's Director Sabbir killing case, citing that the emergency power rules (EPR) do not allow a trial judge to entertain such a plea.

However, Commerce and Education Adviser Dr Hossain Zillur Rahman yesterday said the Government was considering the issue of the release of two detained former Prime Ministers-Begum Zia and Sheikh Hasina-for medical treatment abroad, on the basis of law, humanitarian ground and the peoples' expectation.

Meanwhile, US Ambassador James F Moriarty did not directly comment on the issue of the conditional release of the two former Prime Ministers, when asked after his meeting with three Government policymakers at the Secretariat yesterday.

But, he hastened to add, "I believe the Government will do everything according to the law of land and the people of this country will discharge their duties for smooth transition to democracy through a free, fair and credible general elections within December this year."

However, sources close to Sheikh Hasina's family and AL leadership said she would leave Dhaka for medical treatment in the US via London tomorrow and she has expressed her desire to hold a party meeting at her Sudha Sadan residence and place wreaths at the portrait of her assassinated father Bangabandhu Sheikh Mujbur Rahman at Bangabandhu Bhaban and offer special prayers at her father's Tungipara grave.

Another source, however, said she might fly on Thursday.

Chamber bodies hail budget

Staff Reporter

Leaders of different chambers bodies' yesterday expressed their positive reactions on the budget declared by Finance Adviser Dr AB Mirza Azizul Islam for the fiscal 2008-09.

In their instant reactions they termed the newly declared national budget 'positive' and comparatively better than that of the previous ones.

They said the proposed budget would encourage investment, strengthen social safety net, alleviate poverty and eliminate both income and regional disparities.

They said that the new fiscal budget has some guidelines that would attract more local and foreign investment in the country. They also welcomed the Government for expanding the period of tax holiday up to June 2011.

They said that the proposed budget has some guidelines that would resolve the economic depression arising from adverse development on many fronts.

Annisul Huq, President of the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) in his reaction welcomed the newly declared budget.

"We welcome the Finance Adviser's efforts for presenting a comparatively industrial friendly budget this year," he said adding that the new fiscal budget would bring dynamism in the field of trade and commerce of the country.

"The proposed expansion of social safety-net programme is a step in the right direction. But implementation will remain a big challenge," he mentioned.

He appreciated expansion of social safety-net programmes and large-scale tax holiday. He said that tax holiday and reduction of duty on raw materials would encourage investment.

He said the new fiscal budget would help promote the export-oriented local industries.

He also said the apex trade body leaders would come up with their detailed analysis tomorrow and make their suggestions to the Government for corrections while finalising the budget to save the interest of the local industries.

"We appreciate the budget proposals for 20 per cent dearness allowance for the Government employees and the common people should have been compensated through raising the tax exemption limit," he said adding the new budget has positive effort in VAT measures.

He appreciated the duty reduction on capital machinery from 5 per cent to 3 per cent and measurers to promote domestic and export- oriented industries.

He, however, pointed out that the customs duty on import of basic raw materials should have been reduced to 5 per cent to promote domestic industrialisation.

The FBCCI President opined that the slabs of customs duties should have been reduced to 5 per cent, 12.5 per cent and 25 per cent for promoting the overall industrialisation in the country.

Abdul Hai Sarker, President of Bangladesh Textile Mills Association (BTMA) in his reaction said the budget for the fiscal 2008-09 is people-oriented.

"We welcome the budget declared by the Finance Adviser Dr AB Mirza Azizul Islam. We consider the budget as people oriented and industrial friendly," said BTMA President.

He thanked the Government for extending the tax holiday. He said the newly declared budget would help in promoting the country's textile sector.

Salahuddin Ahmed Khan, Chief Executive Officer (CEO) of Dhaka Stock Exchange (DSE) Ltd welcomed the budget. He welcomed the Finance Adviser for taking decision for offloading the telecommunication, power and energy sectors shares.

20pc DA proposed for Govt employees

Staff Reporter

Finance Adviser Dr AB Mirza Azizul Islam yesterday proposed to constitute a Pay Commission to review and recommend a revised pay structure for the employees of government and autonomous bodies at the beginning of the next fiscal.

He also proposed 20 percent dearness allowance (DA) for government employees and pensioners effective from July 2008, aiming at reducing the hardship of the fixed-income people.

"The fixed-income group of people is facing hardship due to high inflation arising from the abnormal price-spikes in both international and domestic markets during recent times,' he said in his televised budget speech, adding that the existing pay structure of the low-paid government employees is not consistent with the cost of living.

In the case of pensioners, the finance adviser said the amount of dearness allowance would be determined on the basis of their un-commuted pension.

"The government has also decided to provide full festival allowance to the pensioners similar to that of incumbent government employees," he said in his budget speech for 2008-09 fiscal year.

The first national pay commission was formed in 1972. Four other pay commissions were formed in 1976, 1984, 1989 and 1996.

Promotion in Army

Bdnews24.com, Dhaka

Military Secretary to the president Md Aminul Karim, and newly appointed principal staff officer of the armed forces Abdul Mobin, have been promoted to the rank of lieutenant general, a government official said Monday.

In the latest of a series of army shuffles, Karim was also appointed head of the National Defence College, secretary to the president Md Sirajul Islam told bdnews24.com by phone.

The posting to the country's top military school was made vacant as Lt Gen Masud Uddin Chowdhury was transferred Sunday for the second time in under a week, this time to the foreign ministry for possible appointment as an ambassador.

Abdul Mobin was appointed as PSO on June 2.

Tax-holiday facilities for new industries

Pulack Ghatack

The Government, in its budget for 2008-09 fiscal, has offered long-term extension of tax-holiday facilities for the newly set up industries in a modified form ignoring the suggestions of World Bank (WB) and International Monetary Fund (IMF).

The facility will continue up to June 30, 2018, as a new industry established outside Dhaka or Chittagong by June 30, 2011 would be eligible for tax-holiday for next seven years. Tax-holiday period for an industry set up in Dhaka or Chittagong in July this year will end in July, 2013.

Tax-holiday facilitates reduction or elimination of taxes. Finance Adviser Dr AB Mirza Azizul Islam in his yesterday's budget speech said, "To encourage the entrepreneurs, the government has decided to continue its tax-holiday scheme for new industries set up between July 1, 2008 and June 30, 2011."

Keeping the existing sectors under tax-holiday intact, the Finance Adviser proposed to include agro-processing, diamond cutting, steel production from billet, jute industries, different units of textile sector, underground rail, monorail, telecom infrastructure except mobile phone.

A total of 999 industries at present are enjoying the facility, which was introduced as incentives for business investment in 1973-1975 fiscal and supposed to end in June this year.

Both WB and IMF had prescribed the government for an end to tax holiday to increase revenue earnings. But, the government continued the facilities considering its positive outcomes.

Tax holiday facilities in last two fiscal years have brought positive impact as production values were 30 times and export value 17 times more than the revenue losses due to the facilities, a study by the National Board of Revenue (NBR) revealed.

According to the NBR study, total revenue loss of the government was Tk 1,205 crore in the 2005-06 and 2006-07 fiscal years due to tax holiday.

The total products in the industries, which have been enjoying tax holiday facilities, is Tk 36,382 crore in the two-year period. Total export of the industries during the corresponding period was Tk 20,354 crore.

On an average the tax holiday-facilitated industries created 392 new jobs in 1973-1975, 1,267 in 1976-1981, 9,024 in 1982-1990, and 23,000 in 1991-1994.

The Finance Adviser has proposed to continue tax holiday facilities for the industrial units in Dhaka and Chittagong (except CHT) for five years and in other four divisions (Khulna, Rajshahi, Sylhet and Barisal) and CHT districts for seven years.

Industrial units in Dhaka and Chittagong (except CHT) will get 100 percent tax exemption for first two years (from the start of production), 50 percent reduction for next two years and 25 percent in the final year.

Industries in other divisions - Khulna, Rajshahi, Sylhet and Barisal, and CHT districts will get 100 percent exemption for the first three years, 50 percent for the next three years and 25 percent in the final year.

In a report, the IMF told the government tax holiday facilities reduce the equity and legitimacy of the tax system and contribute to the public's cynical attitude toward the tax system by eroding the civic responsibility to pay taxes.

Anti-crime drive: 1,538 more arrested across country

Staff Reporter

At least 20,000 people, including activists of mainstreams political parties, have been arrested by Joint Forces in the anti-crime crackdown launched across the country in 11 days.

A press release issued by the Police headquarters yesterday said 1,538 people were arrested in the past 24 hours. The law enforcers also recovered

22 firearms, 10 hand bombs, 5 cocktails and 26 rounds of bullet during the period, it added.

Besides, 50 motorbikes were seized for not having valid documents and 1,777 cases were filed under the Motor Vehicle Act during the drive.

In Satkhira, Rapid Action Battalion, in a drive Sunday night, arrested five people alongwith arms and ammunition from a shrimp enclosure in Shyamnagar upazila.

Acting on a tip-off, the RAB members first arrested an alleged land grabber,

Abu Bakar Siddiq alias 'Khora Bakar', from Sultanpur in the district town on Sunday night.

Following his statement, the force raided a fish farm, "Chukuri

Fish Project", in Shyamnagar upazila and arrested four people Abdul Qader, Bulbul, Abu Masa and Abdur Rashid.

They also recovered three pipe guns, a gun, a pistol, 11 bombs and four bullets from the fish farm.

The arrested were handed over to police.

Police said Abu Bakar was an accused of cheating people and grabbing land for setting up shrimp enclosure.

Mymensingh, Joint Forces, in a drive, seized 540 sacks of fertilizer and 10,000 Indian rupees from the godown of a fertilizer dealer at Moddhobazar in Haluaghat upazila yesterday.

Acting on a secret information the Joint Force conducted drive in the godown of local fertilizer dealer Shah Newaz and seized 540 sacks of MOP fertilizer and 10,000 Indian rupees.

Police said the fertilizer sacks were hoarded in the godown for smuggling to India. Shah Newaz went into hiding. Police sealed the godown.

Tri-Nation Cricket: Indo-Pak clash today

Sports Reporter

The two titans of World Cricket, Pakistan and India, will face each other today in a One Day International (ODI) match of the Tri-Nation Kitply Cup at the Mirpur Sher-e-Bangla National Stadium. Bangladesh Television will telecast the match live from 2.45 PM from the stadium.

India and Pakistan faced each other 113 times so far. Of them, Pakistan won 66 ODI matches and India registered 43 wins while four matches ended in ties or those matches had no results. But recently India showed better performance than Pakistan and earned more wins than their arch rivals between the clashes of the two titans of Asia.

Garry Kirsten, the coach of Indian team, told the newsmen that India-Pakistan matches were always going to be great matches. Answer to a question about his players, the coach replied that his guys were motivated for the matches and it was a great thing for them that they were representing their country.

On the other hand, coach of Pakistan team Geof Lawson told the newsmen that it would be a big match. He also added that India was a good side.

The cricket lovers of the whole world, specially Asian people, expect an entertaining match from the two World Cup champions.

Costs up, costs down

Staff Reporter

Supplementary duty of 60, 100, 250 and 350 per cent on vehicles having higher displacement capacity have been proposed in the budget to discourage import of luxurious vehicles.

To prevent imports of new vehicles in guise of reconditioned vehicles, the Finance Adviser proposed in his budget speech to amend the conditions of eligibility for reconditioned vehicles. These are: time gap between registration and deregistration has to be 365 days and the vehicles must run at least 1000km before shipment.

The budget proposes to impose specific duty on sugar, and raw materials for steel products used in the construction sector (meltable scrap and re-rollable scrap) 'in the backdrop of recent abnormal price escalation in the international market and to stabilize domestic market.'

It proposes to raise duty on import of printed papers from 15 per cent to 25 per cent as the

Finance Adviser said, 'There has been some phenomenal growth in the country's printings sector, and lower duty on printed papers has made our publishers and printers face uneven competition.'

The Finance Adviser proposed to raise customs duty from the existing 10 per cent to 25 per cent on pictorial and drawing books used for educational purpose for young children as 'the contents of these books, in most of the cases, are not in conformity with our own values and culture.'

In the interest of public health, the Finance Adviser proposed to impose 60 per cent of supplementary duty on the raw materials for manufacturing cigarettes and 20 per cent on the papers used in producing packaging materials of cigarettes.

In the interest of protecting some industries producing import substitutes, the Finance Adviser proposed to enhance the customs duty on imports of certain products. With similar objectives, he also proposed to impose and increase supplementary duties on certain items.

The viewing of satellite TV channels will be costlier as the government proposes to enhance the existing rate of

supplementary duty from 15 percent to 35 percent for the satellite channel distributors.

The Finance Adviser in his budget speech said the local satellite TV channels are subject to payment of 15 percent VAT on the commercials telecast on their channels whereas the foreign TV channels pay no VAT on commercials that are telecast in Bangladesh.

"Although these commercials are not directly targeted towards our local consumers, but they indirectly help creating import demands for commodities shown on these commercials."

Moreover, he said, different programs including foreign movies are freely being shown on various local and foreign TV channels through satellite.

The proprietors or distributors of foreign TV channels are not paying the VAT applicable on commercials that are telecast on their channels depriving the government from its fair share of revenue.

In view of the situation, the Finance Minister proposed to enhance the existing rate of supplementary duty from 15 percent to 35 percent for the satellite channel distributors.

Down

Reduction of supplementary duty from 60 per cent to 20 per cent is proposed on importation of ordinary non-luxurious microbuses, within the displacement capacity from 1500cc to 1800cc used for transportation of passengers and industrial raw materials.

Finace Adviser Dr Mirza Azizul Islam proposed in his budget speech to withdraw 15 per cent VAT on importation of mild steel (MS) bar and rod.

He proposed to reduce duty on import of printing papers to 12 per cent from 25 per cent.

The Finance Adviser proposed to withdraw 20 per cent of supplementary duty on import of dates taking into account the religious sentiment of people as 'dates are primarily consumed by the devout Muslims during iftar and are imported during the month of Ramadan.'

He proposed deduction of taxes at source, at the rate of 3 percent, by the bill paying companies and statutory bodies against the bills payable for advertisements published in newspapers or periodicals or telecast on private TV channels.

To ensure proper business record keeping, the Finance Adviser proposed to abolish the existing 15 percent VAT, 3 percent AIT and 1.5 percent ATV on import of electronic cash registers (ECRs). No duties and taxes shall also apply on import of ECRs.

Reduction of customs duty from 25 per cent to 7 per cent have been proposed on import of inhaler actuator used as medicaments. Besides, total abolishment of supplementary duty on inhaler actuator proposed.

Besides, the Finance Adviser propose to reduce customs duty on equipment used in agriculture like irrigation pumps, diesel engine and tractors to 3 per cent from various existing rates.

Since children are prone to deadly thalassemia disease, treatment of this disease is expensive and its medicines are not produced in the country. Recently, customs duty and VAT on imports of drugs used for treatment of this fatal disease have been withdrawn. The Finance Adviser proposed to maintain the existing duty free benefit for the importation of life saving drugs.

To provide impetus to the local industries, the Finance Adviser proposed to reduce customs and supplementary duties on certain raw materials and intermediate goods.

Non-resident Bangladeshi foreign exchange earners bring with them some ordinary electronic appliances when they come back home. But as these items are subject to duties and taxes, they face difficulties in clearing those items at the airports. In order to mitigate these difficulties, the Finance Adviser proposed duty free clearance of such items by amending the existing baggage rules.

Legalising undeclared income proposed

Staff Reporter

The government yesterday allowed legalising of undeclared legal income with penal tax of 7.0 per cent on top of the normal tax rate.

The legalisation of undeclared income has been allowed for the first four months from July to October of the fiscal year 2008-09.

Finance Adviser Dr AB Mirza Azizul Islam in his budget speech allowed declaration of undeclared legal income of individual tax-payers to expand revenue base.

Economists believe that hundreds of billions of Taka remains in the informal chain and could not contribute to the economy as the taxpayers did not disclose those due to various reason.

Last year the caretaker government offered the opportunity of legalising undeclared income for four months from June to September. Last year people had to pay a penal tax of 5.0 per cent plus normal tax rate under the opportunity.

Only Tk 52.13 billion worth undeclared income was 'legalised' last year from which the government earned an extra tax of Tk 8.02 billion.