Big budget big deficit

Big budget is inevitable for a developing country, but when the revenue earning is heavily reliant on value added tax and supplementary duty, as this budget is, it is the people across the board that will have  to bear the brunt of it. The NBR has an uphill task too, given that its target this year has been increased by 30 percent from last year's target, which was not fully met.

However, there are some positive elements in the budget. We welcome the reduction of tax on agriculture and removing some agricultural inputs from the taxable list. The increase of allotment for health and education is also laudable. However, insofar as the education sector is concerned, we wonder how much of the fund allotted will be utilised for the purpose of enhancing the quality of education.

Of the revenue expected, nearly 37 percent is anticipated to accrue from VAT. For the first time, the government will levy a flat rate of 15 percent. Although some common use items have been kept outside the ambit of VAT that will hardly ease the effect of the 15 percent levy. We are surprised that the finance minister shifted from his assurance to reduce VAT duty and came back to 15 percent. However much the government denies, this will spike up prices and will affect the rich and the poor in equal measure.

We fail to understand the logic of borrowing more than Tk. 28,000 crore from the banks but subsidise the non-performing ones to the tune of Tk. 15,000 crore. This we feel is a total waste of public money unless discipline is ensured in the banking sector. It is like pouring water in a leaking bucket.

Enhanced excise on bank deposit is a disincentive since it affects the account holders in at least three different ways, particularly the small savers who will be snared in the web of tax-vat and duty. It is also surprising that there is no direction in the budget about employment generation.

We repeat what we said yesterday, it is indeed an election oriented budget where the people will be under severe duress to meet the funding for the development wave of the government. It is a budget that will squeeze the tax payers evermore. And unless the government ensures quality spending and restores discipline in the financial sector, the implementation of the budget will remain a chimera.