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Bangladesh - June 12, 2024

New budget offers little for poor

Zarif Mahmud: The budget for the new financial year was presented last Thursday. Now the review is going on – how much the power matches the demand. Whether the finance minister took any measures to relieve the high price market, how much the common man got, whether the tax burden on the rich increased or decreased, how much of the income will go to which sector – all this is being analyzed. Those concerned say that the finance minister has placed all the instruments to increase the income in the government’s ‘world of tension’, the scope of taxes in the budget of the new fiscal year is clearly increasing. In many cases, the new taxes come into force immediately after the budget is presented. As the days go by, the life of the common people trapped in this tight bond of tax net is getting more and more difficult.
Economists say that the National Board of Revenue (NBR) has ruthlessly laid a tax net in this year’s budget to increase the government’s revenue. The new tax proposals in the budget may make life more miserable for the public. Because in this budget, VAT-tax has been increased on many items that are close to the life of common people like the cost of talking on mobile phones.
In this regard, prominent economist and executive director of South Asian Network on Economic Modeling (SANEM) Salim Raihan said in light of the time, “After reviewing the budget of 2024-25 fiscal year, it can be said for sure that the lives of common people will be caught in the net of the new budget.” The budget will put tax rate pressure on the lower and middle class. Because increasing the tax on daily essentials like mobiles will put more burden on the low-income people. In the budget for the financial year 2024-25, the supplementary duty against services provided through mobile phones is proposed to be 20 per cent instead of the existing 15 per cent. Along with this, it has been proposed to increase the value added tax of SIM. On the other hand, due to the increase in the cost of living, it was necessary to increase the tax-free life limit from Tk 4 lakh to Tk 4.5 lakh in this year’s budget. Instead of doing that, the previous one has been upheld. This decision was not at all people-friendly in this high cost of living market. He further said that although the common people of the country were not exempted from high taxes, the government did not increase the tax burden on a large part of the rich class of the country. In many cases the super-rich and the rich are largely exempt from taxation.
How this budget will make life more difficult: According to the budget proposal for the fiscal year 2024-25, the National Board of Revenue (NBR) will collect a higher tax on every recharge of Tk 100 on mobile phones. This will increase the cost of phone calls and data usage. Out of this Tk 100, only Tk 28-30 will go towards VAT-tax and various charges of the mobile company. These high tax burdens are being imposed at a time when people are struggling to survive the effects of inflation. Because according to Bangladesh Bureau of Statistics (BBS) data, last May inflation was 9.89 percent, a month ago it was 9.74 percent.
In this year’s budget, the tax for the residents of the areas outside the city corporation has been fixed at Tk 3 thousand. There is some good news for those whose income is between Tk 11 to Tk 21.5 lakh per annum. NBR wants to restore 30 percent tax on high income earners after four years. If the annual income is more than Tk 43 lakh, 30 percent tax will be paid. However, no additional surcharge was imposed on the wealth of the wealthy.
In this year’s budget, the NBR wants to make it mandatory to submit proof of tax returns for obtaining and renewing licenses of hotels, restaurants, motels, hospitals, clinics and diagnostic centers. Otherwise, the common people will have to bear the burden of these taxes. Because it is certain that the companies will increase the fees or charges in taking these products and services. Apart from this, it is proposed to bring back the tax rate of 27.5 percent on income from provident fund, gratuity and pension fund, which is currently 15 percent. Apart from this, the 20 percent tax proposed on the income of cooperatives will also have to be borne by the common people.
On the other hand, due to this year’s budget, it will be difficult to go anywhere with family. If you want to go on a package tour through a tour operator, their cost will increase quite a bit. Because VAT exemption on services of operators is coming to an end and they will have to charge 15 percent VAT from now on. Traveling by metro rail will cost extra as NBR no longer wants to give VAT discount on metro ticket price.
Meanwhile, the finance minister has noticed that many middle-class families iron or wash their clothes in the laundries. In this case, the VAT rate has been increased by 5 percent. That means washing and ironing costs will increase. Apart from this, security guards are kept at homes and businesses for the safety of the family. VAT on this service has also been increased from 10 percent to 15 percent.
Eminent economist and executive director of Policy Research Institute Ahsan H. Mansoor said in the light of time, “The budget of the new financial year will not bring any relief in the life of common people, because the finance minister has not put any such effective system in the budget. It is only those wealthy businessmen who will take advantage of the reduction in duty on the two daily commodities. Because the price of goods does not decrease even if the government gives tax breaks. Rather, this year’s budget has introduced new taxes or increased tax rates in many places – which will make the life of the common man more difficult.

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